Has the Final Chapter of the Bull Market Begun? US Stock Retail Investors Return to the Market, ETF Inflows Approach Historic Highs

Net inflows into U.S. stock ETFs surpassed $150 billion in a single month, marking the second highest record in history. The signal of a full-scale retail investor entry has raised market caution—historical experience shows that this often indicates the last stage of the current rally.

The pace of retail return has noticeably accelerated. Previously, retail investors exhibited an unusually cautious attitude during market volatility, and the willingness to buy dips cooled significantly; now, such caution seems to have been cast aside.

Based on statistics from nearly 100 of the largest U.S. domestic stock ETFs, total capital inflows over the past month exceeded $150 billion, the second highest level on record.

In this wave of capital, the catalyst effect of the SpaceX IPO is worth noting. Cathie Wood's flagship product, ARK Innovation ETF, saw a significant influx of funds on the day SpaceX went public.

Meanwhile, the bull-bear sentiment ratio of the American Association of Individual Investors (AAII) still hovers near a 12-month low, indicating that retail investors verbally remain cautious; however, the same survey shows that retail investors’ actual stock allocations continue to rise—a divergence between rhetoric and action that is worth monitoring.

Retail Entry Often Heralds a Market Top

Market participants generally believe that a typical bull market evolves along a fixed path: "smart money" is first to detect the trend and position itself, followed by institutional investors entering in the second phase, and finally, public investors rush in when market enthusiasm peaks, often with little regard for valuation.

Following this logic, when retail investors pour in, the "smart money" has usually begun to exit. The market may continue to rise on inertia until buying power is exhausted, after which a reversal becomes inevitable.

It is still too early to assert that history will fully repeat itself, but analysts point out that the recent performance-driven rally may signify the end of the "recognition phase" and that the market may be standing at the threshold of transitioning to the "mania phase."

Multiple Structural Risks Are Building

At the same time, macro-level concerns are accumulating. Structural pressure from excess stock supply and tightening liquidity continues to rise.

In addition, market expectations for the policy direction of the Federal Reserve may face repricing—if the Fed under Waller turns out to be less dovish than expected, liquidity constraints will tighten further.

Analysts warn that the resonance of these risks may cause the previously confident "smart money" to adopt a wait-and-see attitude, and retail investors who remain in the market will bear greater market volatility risk.