Buy the dip’ has become the new mantra for individual investors in the United States. David Kruk (LFDE) reveals that the influence of household stock market purchases is growing. Daily investment flows have increased more than fivefold since 2020, according to data from Vanda Research.
Other figures confirm the growing influence of individual investors. Citadel Securities’ Scott Rubner noted that activity among retail traders reached a record high for January, with net inflows in equities exceeding $350 million and $300 million in derivatives.
The S&P 500 rose by 1.4% in the first month of 2026, as retail investors continued to apply their winning strategy of 2025: buy the dips, unperturbed by geopolitical, economic and trade fears. While many intraday falls were taken advantage of.
David Kruk, head of the trading desk, and Pierre Puybasset, LFDE’s management spokesman, have observed this phenomenon. At their monthly meeting, the two specialists discussed market trends, an initial analysis of the start of the year and the outlook.
The markets remained resilient in January despite a cascade of geopolitical stresses: Venezuela, Greenland, Iran. Donald Trump took the initiative. However, David Kruk analyses the American President’s behaviour and puts it into perspective. “It’s a classic. Trump is starting from a hard line position. He attacks before creating leverage and negotiating. The market is getting used to it,” explains the head of LFDE’s trading desk.
To January’s events, and for the sake of completeness, we need to add the credit card chapter (with the desire to temporarily cap lending rates at 10%), the unknown about the legality of customs duties, and the appointment of the future Fed boss with the independence of the Fed on the dotted line and the dismissal of Lisa Cook. Welcome to 2026..
“In the end, these factors had little impact on the markets, which ended up 2 to 3% higher, in euphoria but not hysteria,” stresses David Kruk.
Too much optimism?
However, David Kruk and Pierre Puybasset feel that there is something that needs to be addressed: the positioning of operators. Indeed, the latest Fund Manager Survey published by Bofa, which gathers the opinions of 300 asset managers, reveals a bullish, perhaps excessive, stance in the market. The survey reveals the highest level of optimism since 2021 about US growth and corporate earnings, the highest level of risk in portfolios for four years and the lowest level of hedging for eight years. While the level of cash still in portfolios is around 3%, one of the lowest ever.
The survey also highlights the fact that commodities are at their most overweight since 2022. Finally, in Europe, 95 per cent of respondents believe that the markets will be higher in 12 months’ time.
“It’s the birth of a fear that could result in a correction, of around 5% in my opinion,” says David Kruk.
Another factor at the start of the year was the movement in interest rates from Japan. The Japanese 40-year bond has just exceeded 4%, the first time this has happened in almost 40 years. This fever pushed the yield on the US Treasury up by around 0.2% to 4.30%. A further rise in rates could become problematic, according to the two experts at LFDE.
Another finding is that some investors are reducing their equity positions in the US market. Like the Norwegian sovereign wealth fund, which has announced that it has lowered its weightings on all US technology stocks held in its portfolio. While QQQ, the most heavily traded Nasdaq 100 ETF, saw outflows of around 6.6 billion in January, according to David Kruk.
Are US households buying more?
But this is not the case for US retail investors, who continue unperturbed to invest in equities, taking advantage of every downturn in the market. They have remained big buyers, with more than 13 billion purchases in one week in January, according to David Kruk, who adds: “Between the end of January and the end of March, each household will receive the windfall of a tax refund – following an overpayment – of $2,000 on average, for a total of $426 billion across the United States. This represents a 16% increase on 2025
Macro remains on track
While the US economy remains in good shape, with GDP growth in excess of 4%. In Europe, the latest upturn in the Purchasing Manager Index (PMI) reflects the optimism of European purchasing managers for the months ahead.
US corporate profits will continue to be buoyant in 2026, with estimated growth of around 15%, compared with 6-8% for European companies.
At the start of the year, the rise in equities appears to be broader-based and is tending to spread across the different layers of the market, with RUSSEL in favour. The US small-cap index got off to its best start since 1996. According to David Kruk, this is a signal for greater diversification.
Corporate share buybacks will gradually resume across the Atlantic with the end of the publication of US corporate results (US companies must halt their buybacks during this publication period). We should also note the return of the M&A.
If TSMC’s boss was positive in January, it will be just as important to dissect NVIDIA’s views on the economic state of artificial intelligence when it publishes its results on 25 February.
It is also worth noting that the4th quarter results are coming out satisfactorily, even if a few good publications have failed, on occasion, to boost the share price.
With the sustained presence of retail investors continuing unabated, David Kruk remains optimistic and is still betting on a euphoric rise in February. But not hysterically, as he likes to point out.
