Mom and Pop Sit Out Rally, With Stock Exposure at Six-Year Low

(Bloomberg) -- January may have seen the strongest start to a year for U.S. stocks in more than three decades, but many retail investors watched the rally from the sidelines.

Clients of TD Ameritrade, already skittish at the end of 2018, further cut their exposure to the stock market in the first four weeks of the New Year, the Omaha, Nebraska-based brokerage said Monday. The firm’s Investor Movement Index -- which has tracked clients’ positioning in the market since 2010 -- declined for the fourth straight month to its lowest since July 2012.

That as the S&P 500 Index gained almost 8 percent in January, the best month for the equity benchmark since 2015. The index hadn’t seen as big a January rally since 1987, when it soared 13 percent.

Mom and Pop Sit Out Rally, With Stock Exposure at Six-Year Low

“Despite the longest running government shutdown, U.S. equity markets recovered in January fueled by well-received Federal Reserve announcements and strong job numbers,” Joe “JJ” Kinahan, chief market strategist at TD Ameritrade, said in the statement. “Still, ambiguity surrounding U.S.- China trade relations kept investors in more defensive parts of the market.”

Clients using TD Ameritrade’s platform still bought financial products, but focused more on less volatile fixed-income assets, according to the firm. When it came to stocks, top buys included Apple Inc. and Amazon.com Inc., while clients sold Facebook Inc. and Twitter Inc.

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