Nov 8, 2026 · 28 min
Listen from 0:32
Listen at 0:32
Retail investors challenge Wall Street’s AI playbook
Can Everyday Investors Beat the Pros in an AI Selloff?
Individual investors now influence market direction at a scale that makes their confidence, tools, and tolerance for losses consequential for household wealth and the broader economy.
- 1Retail investors increasingly buy AI-related declines while institutions reduce exposure, challenging the old smart-money hierarchy.
- 2Commission-free trading, pandemic participation, and broader access to options and ETFs transformed retail activity into portfolio strategy.
- 3AI tools could narrow the gap between individual and institutional investors while amplifying market moves during economic weakness.
Don't miss
Hannah and Scott argue that retail investors buying sharp declines may be rational and increasingly sophisticated, not simply reckless dip-buying.
The brief
Miriam Gottfried frames a debate with Hannah Lang and Scott Rubner over whether individual investors have become a durable market force rather than a speculative sideshow.
Households, including many younger and lower-wealth investors who entered after 2020, increasingly trade the same AI-related names as institutions—and often buy when professionals sell.
Commission-free apps, pandemic-era participation, options, IPOs, and prediction markets helped retail evolve beyond meme stocks into diversified portfolios that can include bonds and ETFs.
The central tension is whether buying sharp declines reflects sophisticated long-term discipline or confidence that could break under unemployment, inflation, higher rates, or weak AI earnings.
Hannah describes AI agents that scan options data and execute trades, while Rubner argues retail’s increasingly professional behavior and strong earnings backdrop can keep the rally going.
Retail activity now serves as a real-time sentiment signal, making individual investors important not only to market strategists but also to understanding household wealth and economic confidence.
What was said on this episode
37 statements · 27 positive · 3 negative · 2 mixed · 5 neutral
Citadel Securities is a global market maker serving institutional and retail clients.
“Citadel Securities is a global leading market maker. We trade both for institutional clients and retail clients.”
Listen at 0:32
Citadel Securities represents about 35% of executed retail shares.
“we represent about 35% of all retail shares executed”
Listen at 0:42
Households are currently the largest owners of equities.
“households are actually the largest owner of the equity market today”
Listen at 1:20
Today’s new investors are a younger, lower-wealth generation participating in markets.
“the new investor today has really been a new generation that's participating in the market”
Listen at 1:41
The top 1% own about half of equities and the top 10% own about 80%.
“the top 1% own about 50%, the top 10% own about 80%”
Listen at 2:23
Retail investors increasingly trade the same AI stocks as institutions.
“retail has moved into the same names that institutional accounts are also very active in”
Listen at 3:04
Retail investors buy more aggressively when markets decline.
“retail becomes very aggressively better buyers when the market is on red days”
Listen at 3:51
Retail investors bought equities for 20 consecutive trading days.
“retail through our platform has been buying for 20 straight days”
Listen at 4:14
Institutional investors sold during the same 20-day period.
“institutional investors have become sellers over those same 20 days”
Listen at 4:29
Retail investment activity signals economic resilience while the job market remains healthy.
“as long as the job markets remains quite robust and healthy, the retail investor, in my view, is a sign of the economic resilience in the marketplace”
Listen at 5:16
Scott is not concerned that the selloff will reduce retail activity.
“I'm not so worried about the sell-off in the market for activity to wane”
Listen at 6:08
The post-2020 retail investor cohort has grown larger and more sophisticated.
“that cohort has only really grown in strength and size and sophistication over that period”
Listen at 7:48
Many retail investors achieved substantial gains in recent years.
“a lot of people have won really big over the past several years”
Listen at 9:14
Retail investors increasingly seek diversified portfolios and buy bonds.
“the retail investor wants a properly allocated portfolio to now they're really buying bonds”
Listen at 9:42
Retail investors can lock in a 3.5% inflation-adjusted 30-year TIPS rate.
“they can lock in a three and a half percent 30 year tips inflation adjusted rate”
Listen at 9:48
Retail investors currently buffer market movements and are a major market feature.
“Retail has been a buffer in that marketplace. I think it's just a major feature of the market today”
Listen at 10:51
Retail investors benefit from not having professional performance deadlines.
“I think that's an advantage that retail has in that regard”
Listen at 11:25
Retail selling behavior changes when the VIX exceeds 30.
“it's not really until the vix goes above 30. where there's a change in behavior”
Listen at 12:02
Buying market bottoms during recent sharp declines produced substantial rewards.
“if you bought at the bottom you were heavily rewarded”
Listen at 14:01
Longer trading hours will likely increase participation and improve market liquidity.
“as markets start to trade 23.5 it's It will likely increase and liquidity will improve in the marketplace”
Listen at 15:29
AI agents can execute options trades based on ranked options-flow signals.
“the agent like placed that trade and tried to follow the momentum”
Listen at 17:27
Agentic trading could expand retail access as significantly as mobile trading or the internet.
“this could be on par with you know mobile trading or even the internet in terms of like what it kind of opens up to to individual investors”
Listen at 17:39
It remains uncertain whether accessible algorithmic trading will let retail investors outperform broadly.
“whether or not this, you know, something like algorithmic trading becoming more available is going to allow everyday people to just like outperform the market on a mass scale”
Listen at 18:04
U.S. ETFs received $1.6 trillion in year-to-date inflows.
“The ETF landscape in the U.S. has seen $1.6 trillion worth of inflows year to date.”
Listen at 19:15
U.S. ETF inflows are projected to annualize at about $2 trillion.
“It'll annualize about $2 trillion.”
Listen at 19:27
Retail trading activity is very likely to keep increasing in coming years.
“retail activity continuing to increase is something that we're very, very likely to see. in years going forward”
Listen at 20:29
The largest stocks and AI-related companies comprise substantial portions of the U.S. market.
“The top seven stocks represent 35% of the market. The top 10 stocks represent 40% of the market. 49% of the market is AI.”
Listen at 21:24
Low correlations among stocks benefit the overall market landscape.
“the entire landscape is actually... benefiting from the low correlation among names”
Listen at 21:39
Understanding retail activity is necessary for a complete market picture.
“you can't necessarily get a full picture of the market today without thinking about what retail is doing”
Listen at 23:23
Stock-market movements increasingly affect household livelihoods and net worth.
“what happens in the stock market can impact the livelihoods and net worths of everyday people on a much larger scale than ever before”
Listen at 23:51
A major market meltdown could seriously harm households.
“people could get really hurt if we do see that sort of massive market meltdown”
Listen at 24:20
A changed macroeconomic environment would affect daily retail trading activity.
“If the macro environment does change for whatever economic reason, it it would impact the activity on a daily basis.”
Listen at 25:12
Retail investors increasingly select stocks deliberately using technology resembling professional tools.
“retail buying the dip, I don't think it's wholeheartedly. They're picking stocks based on a view that they have. with the use of technology that makes them look like professional investors.”
Listen at 25:42
Q3 earnings are tracking 30% year-over-year EPS growth versus 27% previously expected.
“right now we're on pace for 30% year on year EPS growth versus 27% coming in”
Listen at 26:27
Nine of eleven sectors are reporting double-digit EPS growth.
“nine out of the 11 gig sectors. all reporting, double digit EPS growth”
Listen at 27:09
Earnings growth has fundamentally driven the 2026 market rally.
“earnings have been the fundamental driver of this rally in 2026”
Listen at 27:29
Peak earnings have not yet occurred and may extend into 2027.
“in 2027, I don't think that we've seen peak earnings yet”
Listen at 27:35
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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