U.S. Retail Investors Show Confidence in TACO Strategy, Weekly Net Buying Hits $12.9 Billion

U.S. stocks continued gains on Thursday (January 22) amid steady economic data and easing geopolitical tensions. Retail investors have benefited significantly from their trust in the "TACO" (Trump Always Caves Out) trading strategy. Data shows that retail investors engaged in aggressive buying this week, with net purchases totaling $12.9 billion, including a $4 billion buy-in on Tuesday following market panic due to geopolitical uncertainty. Morgan Stanley data reveals that over the past 21 trading days, retail investors' cumulative net buying has surpassed $45 billion for the first time, marking a shift from defensive to more active portfolio allocation. Technology stocks remain the primary focus, with Tesla (TSLA-US), Amazon (AMZN-US), Micron (MU-US), and Taiwan Semiconductor (TSM-US)(2330-TW) drawing significant attention. Geopolitical risks initially boosted demand for precious metal ETFs after Trump's tariff threats regarding Greenland. However, his softened stance at the Davos Forum, indicating no February tariffs on Europe, alleviated market concerns and reversed risk sentiment. Economic fundamentals support the bullish outlook, with third-quarter GDP revised to a 4.4% annual growth rate—the fastest pace in two years. Personal spending rose steadily in November, while initial jobless claims remained low at 200,000. These strong indicators suggest the Federal Reserve will likely keep rates unchanged until mid-2026, when a new chairman takes office. Retail traders are also active in derivatives markets, leveraging increased trading volumes. According to Citadel Securities' Scott Rubner, daily trading of stocks and options by individual investors is now over 40% higher than the average from January 2020 to January 2025. Despite the enthusiasm, Goldman Sachs warns of stretched positions and extreme optimism, which could lead to a "headline-driven reversal" if market sentiment shifts abruptly.