Buying the dip is played out. Retail investors are all about 'sell the rip' now.

• Until recently, retail investors could be relied upon to buy any dip in stocks.
• The Iran war has changed that.
• Recent data shows day traders have been "selling the rip" instead, indicating nerves.

Death, taxes, and retail traders buying the dip.

Those used to be the only certainties in life. Throughout 2025, even when institutional investors were feeling sheepish, day traders could be relied upon to step in and backstop a sell-off.

Dip-buying basically became their identity. A year-end review from JPMorgan found that — in their most active year to date — retail investors amassed 75% of their positions during buy-the-dip episodes.

The Iran war seems to have changed that. We just got a great example of the shifting dynamic this week.

Coming off a three-day skid of 3% to end last week, the S&P 500 entered Monday on a mission, rebounding as much as 2.2%. It was exactly the type of dip-buying episode that retail investors would've participated in last year. They'd be scooping up everything in sight.

Not this time. In fact, JPMorgan found that retail traders were net sellers of stocks for the first time in nine months. What a heel turn! They didn't buy the dip … they sold the rip.

There have been other recent signs of tepid sentiment. Day traders also just turned in their slowest week of purchases in four months, JPMorgan data showed. On Wednesday, they reverted back to net sellers of single stocks — again on a day when the market rose.

Selling aside, a look at what retail investors have been buying also shows they're making a cautious pivot. JPMorgan said that intermediate-term Treasury products — some of the safest assets out there — were among the most-purchased this past week.

Some data suggests the cautionary behavior started even before the Iran war, and has carried over. Across the past two months, retail investors stepped up purchases of short and inverse ETFs that profit when the S&P 500 declines.

JPMorgan found that those positions have paid off, helping retail traders beat benchmarks. This success is likely to reinforce the psychology that has them selling the rip.

Will the rotation in behavior have legs? Are retail investors officially retired from buying the dip? Much will hinge on the war, and whether a resolution can be reached quickly. The longer the overhang exists, the more disenchanted day traders are likely to get with their old playbook.