The average retail investor's portfolio has lost 32% of its value in this year's sell-off — but that hasn't stopped them from buying the dip in stocks, research firm says

• Retail investors have been sticking with buying the dips in stocks even as the value of their portfolios has suffered, Vanda Research said.
• The average portfolio drawdown is 32%, the sharpest decline since the firm started tracking such data eight years ago.

Amateur investors continue to buy into the US stock market's downturn despite a steep decline in the value of their portfolios, and their moves have helped the S&P 500 avoid deeper losses in recent sessions, Vanda Research said Wednesday.

Net inflows into US equities by retail investors were hovering near all-time highs, at $1.3 billion a day on average on a three-month basis, the research firm said in a weekly update.

That coincided with an average portfolio drawdown of 32%, which is the worst performance by retail investors since the firm started tracking data in 2014. Stock holdings have been hit hard during a slump in the US equity market that's dragged the Nasdaq Composite into a bear market and the S&P 500 toward the edge of one.

The broad index's value has slid by more than $2 trillion this year, to $38.3 trillion, due in part to concerns about the US economy tipping into recession as the Federal Reserve fights hot inflation with fast and large interest-rate hikes.

"History taught us that when facing losses of this magnitude retail would have given the first signs of capitulation, but sentiment appears to be (still) quite resilient," Vanda researchers Marco Iachini and Giacomo Pierantoni wrote in a note. The company's VandaTrack tool monitors retail activity in more than 9,000 stocks and ETFs in the US market.

Retail investors have helped "rescue" the S&P 500 in recent days as it appears quick, late-afternoon recoveries by the index have been fueled by retail investors engaging in a buy-the-dip strategy.

The S&P 500 last week briefly dropped into a bear market, but as of Tuesday hadn't closed a trading session at least 20% below a recent high.

"The large inflows from retail investors towards the end of the day – without additional selling pressure from institutional investors — were probably the main force behind these sharp intraday rebounds," Vanda said.