Friday Charts Showdown: How Retail Traders Are Outsmarting Wall Street in 2025

Retail traders flip the script—again. While hedge funds scramble to adjust their algos, Main Street's day traders are riding meme stocks and altcoins to outsized gains. The little guys aren’t just playing the game anymore—they’re changing it.

Wall Street’s playbook? Officially outdated. From decentralized finance to AI-powered trading bots, retail investors now wield tools that bypass traditional gatekeepers. The irony? Banks spent decades building moats—only to watch Reddit and Telegram groups storm the castle.

One hedge fund manager (who definitely isn’t sweating) told us: 'This is just a temporary imbalance.' Sure—just like Blockbuster’s 'temporary' DVD rental slump in 2005.

The takeaway? Markets aren’t rigged—they’re being rewritten. And this time, the suits aren’t holding the pen.

The US personal savings rate ticked down to 4.5% in June. That’s low by historical standards, but still 4.5% of a large and ever-growing number. Some portion of those savings will go into buying equities every month, whatever the news.

Sentiment still has some catching up to do:

Stocks are back at all-time highs, but investor sentiment, as measured by AAII, remains on the bearish side of neutral.

Moving out on the risk curve:

US investors are embracing risk, perhaps because stocks seem less risky after weathering all the seemingly bad news this year. If equities are less risky overall, it makes sense to buy higher-risk equities.

The rest of the world is buying value:

Per Goldman Sachs, there’s been an unprecedented divergence between the outperformance of growth stocks in the US (the dark blue line) and the outperformance of value stocks in the rest of the world (the light blue line). While the rest of the world reaches for safety, US investors are all-in on growth.

Is everything SAFE now?

Ed Yardeni notes that profit margins in the semiconductor industry continue to rise. Semis were historically the most cyclical and therefore riskiest sector to invest in. Now, they seem almost defensive.

Good news or bad for humans?

Less than 10% of companies polled by the US Census Bureau report employing AI over the past two weeks. That might mean AI has only just started disrupting the job market. Or it might mean humans are more useful to employers than the AI HYPE would have you believe.

The proximate cause for all-time highs?

Expectations for an imminent rate cut are giving investors a reason to buy now.

One less reason to worry:

The Cleveland Fed InflationNow model sees US prices, as measured by CPI, rising at an annual rate of just 1.6% in Q2.

Stocks for the long run:

Bank of America strategists say US equities are on the cusp of just the seventh “great breakout” since 1990.

Noting the new highs in equities this week, a Bloomberg article listed all of the things that should be worrying markets at the moment — tariffs, the economy, consumer spending, and even professional advice to be cautious — and then concluded that “investors appear to be ignoring all of it.”

Peter Lynch would approve.

Have a great weekend, breakout readers.

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