Individual investors showed a surprising amount of resilience in the face of August’s rocky trading according to a TD Ameritrade index. Instead of entirely running away from the market, they carefully reduced their risk exposure, said JJ Kinahan, chief strategist at TD Ameritrade (AMTD). The behavior-based TD Ameritrade Investor Movement Index (IMX), which aggregates Main Street investor positions, dropped 2.78% to 5.24 in August as retail investors slightly decreased their exposure to the U.S. equity markets. The S&P 500 fell over 6% in August, while the VIX, or so-called fear index, ran from 12 at the start of the month to over 40 before finishing at just under 30. ‘It shows that the retail investor, like the professional, is trying to stay as nimble as possible,’ said Kinahan. Each month, TD Ameritrade pulls a sample from its client base of 6 million funded accounts that includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX. In terms of specific stocks that Main Street investors purchased over the course of the month of August, Kinahan said individual investors were net purchasers of media names like Twitter (TWTR), Disney (DIS) and Netflix (NFLX). ‘The media industry got pounded and our clients seemed to think it was a bit overdone,’ said Kinahan. ‘So far, to their credit they’ve been right.’
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