The Markets Rise of the Retail Investor
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Nov 7, 2025 John Marshall, head of derivatives research at Goldman Sachs Research, dives into the dynamic role of retail investors in shaping markets. He highlights how retail activity is tracked through various cohorts and trends, showcasing significant ETF inflows and a shift towards thematic buying. John discusses the implications of retail sentiment, suggesting that investors should monitor this enthusiasm rather than fade it. He also explains the surge in short-dated options activity and how retail can drive earnings volatility, linking it to active hedge fund strategies.
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Track Retail By Four Market Channels
- Retail activity can be tracked across ETFs, single stocks, options, and mutual funds to identify distinct investor cohorts.
- Goldman Sachs uses public, quantitative signals like trade sizes and market prints to separate retail behavior from institutions.
Retail Has Flooded ETFs And Thematic Stocks
- retail ETF inflows were unusually large in 2025 with about $350 billion, surpassing 2021 levels.
- Single-stock and NASDAQ 100 thematic buying, especially around AI, has also accelerated materially this year.
Follow Retail Momentum, Don’t Fade Immediately
- Do not reflexively short a name just because retail interest is high; follow retail sentiment instead of fighting it.
- Use short-term trailing activity (e.g., two-week measures) to predict near-term retail flows.