The success of individual investors in the stock market challenges the perception of them as “dumb money” and shows the effectiveness of a long-term mindset and risk-taking in the technology-driven market.

In recent years, there has been a prevailing belief that individual investors are unsophisticated and prone to making poor investment decisions. However, the performance of the average individual-investor stock portfolio tells a different story. According to investment research firm Vanda Research, the average portfolio has risen about 150% since 2014, outperforming the S&P 500’s roughly 140% during the same period.

This success can be attributed to several factors. First, individual investors tend to have a long-term mindset, which allows them to weather short-term market fluctuations and focus on the potential growth of their investments over time. Second, they are willing to take risks, particularly in the technology sector, which has been a dominant force in the market over the past decade. Tech giants like Apple, Tesla, and Nvidia have seen significant gains, contributing to the overall performance of individual investors’ portfolios.

It is worth noting that individual investors often have an outsize position in megacap tech companies, with Apple, Tesla, and Nvidia alone making up about 40% of the average portfolio. While this concentration can be risky, it has paid off in recent years as these companies have experienced substantial growth.

The rise of online brokerages like Robinhood has also played a role in the success of individual investors. These platforms allow users to invest in companies they know and use, creating a sense of familiarity and confidence in their investment decisions.

Overall, the performance of individual investors in the stock market challenges the notion that they are “dumb money.” Their long-term mindset, risk-taking nature, and focus on technology stocks have proven to be successful strategies in the current market.