Big bubbles do not deter bullish investors

Almost nothing seems to worry individual investors lately.

They overcame concerns about tariffs, inflation, and a potential stock market bubble, and continued to buy their favorite stocks and ETFs throughout the year. Despite concerns about economic policy, overvaluation of AI stocks, and rising prices, investors are mostly optimistic about the stock market right now, according to Investopedia Last scan. More than 60% describe themselves as either optimistic or cautiously optimistic, while less than a third say they are skeptical or hesitant.

Buy the dips

The late-November sell-off across the market’s biggest stocks — such as Nvidia (NVDA), Amazon (AMZN), and Palantir (PLTR) — didn’t dampen investor optimism. In fact, it may have encouraged them to buy more, increasing their positions in the most popular stocks in their investors’ portfolios. According to the Schwab Trading Activity Index, or STAX, Schwab clients took advantage of drawdowns in those massive stocks and bought the dip at one of the fastest paces in history.

They did this even though the majority of our survey respondents believe AI-related stocks are in a bubble, and nearly half feel the same way about the market’s largest technology stocks. More than half also believe cryptocurrencies like Bitcoin are shallow, despite the price of Bitcoin falling by 25% over the past month.

Key risks throughout the year

Investors had plenty to worry about throughout 2025. Whether it was the Trump administration’s initially aggressive tariff policies, the rise of Chinese AI model DeepSeek, geopolitical instability in places like the Middle East and Ukraine, or the reliability of government data, key risks were the norm throughout the year.

While this may have contributed to greater stock market volatility in recent months compared to the past few years, individual investors have mostly stayed the course with their investment strategies. They backtracked slightly on their investment plans during the tantrums last April, but have steadily returned to their normal allocations to the stock market.

Concerns about recent market events have also dissipated, a sign that investors are becoming accustomed to more uncertainty.

Trust in markets more than politics

While individual investors are mostly optimistic about the stock market and their portfolios, their confidence in this administration continues to wane, and their fears that its policies will hurt their investments continue to rise.

However, most of them believe in the continued rise of the stock market, regardless of who may occupy the Oval Office, and expect annual returns of at least 5% over the next three years. That’s lower than the 14% average annual returns for the S&P 500 over the past five years, but it’s still optimistic.

Where can you invest an extra $10,000?

In another sign of investors’ optimism and risk tolerance, most would choose to invest an additional $10,000 – if they had it – in individual stocks. They have benefited from owning many of the largest and fastest-rising stocks in the market over the past several years, and they expect this trend to continue over the next decade.

What are our positions?

Individual investors’ portfolios closely mirror the top 25 stocks in the S&P 500, or the top holdings in popular ETFs like VOO (VOO), SPY (SPY), and QQQ (QQQ).

They’ve remained loyal to these stocks, which include the Magnificent 7, as well as banks like JPMorgan Chase (JPM) and conglomerates like Berkshire Hathaway (BRK.B). Many of them became millionaires who owned these stocks and continued to buy them during this bull market, which began more than three years ago.

Pick one stock to own for the next decade

Their belief in these giant stocks is so strong that not only are they their largest holdings today, but most will buy and hold the same set of stocks for the next decade.

Old habits die hard, especially when the bull keeps running.