Why Retail Investors Blew Away Hedge Funds, The S&P And Nasdaq, In 2025

While 2025 was a very tough year for institutional investors in general, and hedge funds in particular, with sentiment turning apocalyptic - and extremely short - just after Liberation Day, with the subsequent rally resulting in significant MTM losses and forced covering, it was a much better year for retail investors who followed a much simpler script: they built substantial positions in AI/Tech companies, did not panic sell during drawdowns, and instead aggressively bought the dip during 3 episodes of weakness between Jan and Apr. Then, from May onward, they scaled back their stock purchases and shifted their focus to trading ETFs, chasing interesting trends such as GLD, which in turn proved to be one of the best investment of the year.