Small investors dump stocks, bet big on oil: Report

Pisani: Commodities hit hard

Retail traders dialed back their overall exposure to U.S. stocks in October, according to a monthly analysis of customer accounts from TD Ameritrade. But those traders snapped up shares of oil companies in a bet that the price of the natural resource would soon rise again.

The IMX Index, a proprietary measure reflecting the overall sentiment of TD Ameritrade customer portfolios, dropped 11 percent to 5.22 in October from 5.79 in September, the second biggest decline in its history. This conflicts with recent surveys of retail traders' opinions that showed them as bullish as ever. The difference between this report and the other surveys is that this reflects actual actions by TD Ameritrade clients.

"Investors dialed back on equities during last month," Nicole Sherrod, managing director for TD Ameritrade, said in a press release. "We're seeing our clients take a longer-term view, adjusting their equity exposure to potentially enhance gains during periods of low volatility, and dialing back without panicking during short-term volatility."

Read MoreTen stock for the next 25 years

The fell 6 percent in the first half of October only to recover all of that loss and then some in the second half of the month. Fears of higher interest rates and Ebola drove the selling. TD traders remained on the sidelines the rest of the month on the apparent belief this comeback would be temporary.

They did buy oil stocks, whose values collapsed on the drop in the underlying commodity during October. Transocean, BP and SeaDrill were net additions in client accounts, according to the report. The price of oil fell Monday, extending its 2014 double-digit drop.

Retail investors also bought stocks that pay a relatively high dividend, perhaps to counter a jump in interest rates. Ford and AT&T saw increased interest, according to TD.

Investors sold shares of Citigroup on a currency trading scandal. They sold Coca-Cola after its earnings announcement. They also lightened positions in technology companies such as Intel, Cisco and Yahoo.