Retail Stock Buying Has Dropped 45% From Late 2025, Goldman Says

Retail participation in the U.S. stock market has fallen by around a fifth since the summer and by 45% compared with late 2025, according to research from Goldman Sachs. That shrinkage lands at the worst possible moment: rising equity supply needs household demand to absorb it.

Ben Snider, chief equity strategist at Goldman Sachs, laid out the numbers in a research note published late Friday. High energy prices and fading consumer sentiment are sapping individual traders' appetite for stocks. Add a spike in Treasury yields above 5%, and cash suddenly has real competition for household money.

There's a newer drain on retail attention too: prediction markets. One year ago, prediction-market volumes ran about $5 billion a month, Snider explains. Today that figure sits closer to $78 billion — a fifteenfold jump. These platforms let retail investors express a view on stocks without buying them outright. That's before counting the cash flowing into exchange-traded funds and options markets.

What does this change for the market?

Plenty, because households are the backbone of U.S. equity demand. Households own 42% of the overall stock market directly, Goldman's report notes, and the top 10% of those households account for seven-eighths of that stake. When the wealthiest cohort steps back, the hole is hard to fill.

And households did fill it, recently. In the first half of 2026, retail investors bought $840 billion in stocks — roughly $140 billion a month — picking up slack as equity supply rose. That buying has now thinned just as the market needs it most.

Goldman has detected a slight uptick in retail activity very recently, a faint "buy the dip" reflex to falling stocks. Overall, though, it hasn't been enough to arrest the correction.

The pros are pulling back as well. Last week's equity-market turbulence inflicted significant damage on hedge-fund trading books, with risk managers de-risking and de-levering.

Meyrick Chapman, principal and founder of Hedge Analytics, pointed to "massive U.S. equity hedge fund dislocation on Thursday in particular." He flagged how exaggerated some moves were in the most popular hedge-fund longs and shorts, and noted it was the second-most volatile day of the year for that class of stocks.

What comes next for household demand?

Looking ahead to 2027, Goldman's portfolio strategy research team expects bond yields and the health of the labor market to determine how much stock households buy. Their base case: demand stays "solid."

The team sees shifts in retirement-asset allocation favoring equities, but partially offset by two forces — higher interest rates and disruption related to artificial intelligence.

For practitioners, the practical question is simple: if households, the market's largest direct owner at 42%, keep dialing back while hedge funds de-lever, who buys the new equity supply? Goldman's answer is that retirement flows will hold the line. The near-term tape — a 45% drop in participation, yields above 5% and prediction markets siphoning attention — suggests that thesis gets tested well before 2027.