The retail investor is still a believer in this bull market even after the slaughter for stocks and unprecedented volatility in August, according to data from TD Ameritrade's 6 million client accounts.
TD's proprietary Investor Movement Index, a measure of investor sentiment based on actual trading activity and not surveys, declined just slightly in August and remained firmly in the bullish portion of its historical range, the data released Tuesday by the firm showed.
Here's what they were buying during the August correction...
Small traders scooped up shares of their old favorites such as Netflix and Disney as the S&P 500 retreated more than 10 percent from a record high reached in May, TD data show.
As the market swung back and forth in wild fashion they also added some lower-beta-type stocks like AT&T.
"For months the has been at relatively low levels, so when things got rocky in the equity markets—our clients maintained composure, managed their risk and quickly bought into dips in the market," said Nicole Sherrod, TD's managing director of trading, in a press release.
McDonald's, Delta, Citigroup and Sirius XM were dumped by the little guy.
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The IMX index neared the top of its historical range in July, hitting the 5.39 level. In August, it fell back to just 5.24 as retail investors went bargain hunting as shares plummeted. IMX's highest value was 5.87 in March 2014 and lowest level was 3.42 in January 2012.
The TD data conflict with reports showing investors fleeing exchange-traded funds last month. This is likely because ETF flow data includes all investors, not just retail. Plus, the TD data likely indicate that the small trader pulled money out as the market decline began, but then came back at the end of the month as prices fell to a point where they believed there was value.
Another interesting stock purchased by the small investor last month was Twitter, which fell below its IPO price during the correction. The social media company has yet to name a new CEO, a delay driving the weakness in the stock.
The S&P 500 fell 6.3 percent in August, the worst month since May 2012. The CBOE Volatility Index reached 40.74 on Aug. 24, the highest since October 2011.
