From Forbes:
TD Ameritrade Holding’s monthly look at its 6 million clients’ trading activity shows that retail investors decreased their volatility exposure for the second consecutive month row in November as the firm’s Investor Movement Index declined to 5.11 from October’s 5.22 and September’s 5.79.
This marks the first time since May and June 2013 that the index has moved lower for multiple months in a row. The cause, however, was not selling as TD Ameritrade clients were net buyers overall. The IMX measures volatility relative to the S&P and investors kept money in the market but shifted their portfolios to be less risky than the index.
“It is a really similar story to what we saw last month,” Nicole Sherrod, managing director of the TD Ameritrade’s trader group. “Our clients were net buyers in the markets overall but they rotated into lower beta positions. They are overall reducing risk but they are still participating in the markets to a higher degree with respect to moving out of cash and into positions.”
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all finished November higher than they started it thanks to earnings growth, an improving labor picture and falling oil prices. In contrast to last year — when the IMX went from 5.07 in October to 5.42 in November and 5.62 in December — Sherrod notes, “clients seem a little trepidatious with how high the market has gotten.”
Retail investors’ caution can be seen in the way they are dealing with lower oil prices.
As Brent crude oil prices finished the month down 15% shares of oil producing companies followed suit. Transocean , Halliburton HAL -4.06% and BP finished the month down 27%, 21% and 7% respectively. Retail investors were net buyers of these names assessing that if oil prices are nearing their eventual bottom oil stocks will soon trade in a tighter range. People also took the moves lower as an opportunity to buy dividend payers cheap. (Investor appetite for yield can also be seen in dividend paying net buys IBM IBM -1.03% and Walt Disney DIS -0.22%.)
Conversely, American Airlines Group AAL +0.25%, Delta Air Lines DAL -0.39% and United Continental Holdings UAL +1.84% were net sells. The declining price of oil pushed airline stocks higher in November...MORE
