Armed with the information and technology to make moves quickly, retail investors are trading more and trading from anywhere they want. Nicole Sherrod, Managing Director of Trading at TD Ameritrade (AMTD) analyzed the trends of more than six million individual investors to find out what they’re buying and how they’re going about it.
During last month’s end of year rally, Sherrod saw TD investors tweak portfolios and take a step back. “In the last quarter, they started to slightly take their foot off the gas. As the market pushed up, they rotated out of some of the momentum stocks and into stocks with higher yield and lower beta.” Sherrod says clients were seeking to balance opportunity with restraint. “It seemed like a very strategic way to position themselves to still take part in the markets as they pushed to higher highs but also be a little more cautious.”
As oil prices plummeted, investors started buying more shares of companies with close ties to the industry. “At the end of the year the big story was energy. I think some of it was trying to call the bottom. They were looking at oil producers that paid a higher yield. I think that was a valuation play,” says Sherrod. Shares in the energy sector were the most popular purchase by TD Ameritrade clients in 2014. Buys of Halliburton (HAL), Chevron Corporation (CVX) and BP PLC (BP) all increased as their stock prices fell.
Individual investors also started becoming more reliant on technology to help power their acquisitions. Sherrod says TD’s mobile usage is at peak levels, with 13.8% of trades going through a mobile device. “They are a very engaged base. Checking in not just on a daily basis but for many hourly.”
The ease and convenience of having real-time information at their fingertips is empowering retail investors to make more educated decisions. “The way they are using mobile now is more push than pull. They get alert notifications if any event happens within their portfolio,” says Sherrod. Look for individual investors to improve their trading strategy and maximize returns in 2015.
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