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THE RISE AND REACH OF RETAIL TRADING IN US EQUITIES

Following a dip in early 2026, retail trading activity has rebounded sharply, Goldman Sachs strategists say. They estimate that retail trading volumes have risen by 28% since mid-April and a basket of retail favorite stocks has rallied by 29% over the same period.

"The recent replacement of pattern day trader rules with less stringent margin requirements increases the likelihood that retail trading activity will rise further," the Goldman Sachs strategists say.

They estimate retail traders hold $12 trillion of equity assets in self-directed brokerage accounts, amounting to approximately 10% of total U.S. corporate equity market value. Yet despite owning 10% of the market, retail traders have recently accounted for roughly 20% of all U.S. equity trading volumes, up from 15% a decade ago but below the peak of 24% in 2021.

However, leverage is a growing concern.

Retail margin debt across FINRA member firms has risen to $1.3 trillion, or 52% of gross customer balances — the highest level on record, the strategists note. Retail traders are also amplifying exposure through leveraged ETFs, whose AUM has grown from $16 billion to $140 billion over the past decade. Across sectors, retail trading volumes have been the highest share of trading volumes within consumer discretionary and technology, the firm says, adding that retail trading activity is highest in stocks with the smallest market caps.

The market impact is real. Stocks with elevated retail activity carry above-average valuations and volatility even after controlling for fundamentals, the firm notes.
Most notably, they suffer greater underperformance following negative earnings surprises, suggesting retail participation shapes how prices respond to new information.

(Joel Jose)

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