July 18 - Individual investors are staying on the sidelines of the stock market, looking for more hand holding while they consider their next move. Sasha Salama reports.
The Facebook IPO fiasco. Fears of the fiscal cliff in the U.S. The European debt crisis. All factors keeping many individual investors on the sidelines. Richard Repetto tracks daily average retail trading at Sandler O'Neill. SOUNDBITE: RICHARD REPETTO, PRINCIPAL, EQUITY RESEARCH, SANDLER O'NEILL & PARTNERS, (ENGLISH) SAYING: "Overall, you see the retail investor pulling back their trades by about 10%. Market volumes overall only down 3% in June. So they are pulling back modestly more than the overall industry is pulling back." The latest results from the nation's brokerages flesh out the picture. Profits dipped at TD Ameritrade as client trading slowed. Charles Schwab, which also caters to the individual investor, reported trading revenue down 10% quarter to quarter. REPORTER BRIDGE: SASHA SALAMA, REUTERS REPORTER (ENGLISH) SAYING: "Individual investors are often the last ones out of a market downturn and the last ones to get back in on the way up. After getting burned before, no one wants to go there again." So more individual investors are turning to investment advisers for guidance. Charles Schwab, which usually attracts the do-it-yourself investor, saw strong demand for its advisory services. As did TD Ameritrade which says the registered investment advisory business is up 45% since 2005. TD Ameritrade says most investors are standing pat, with about half their assets in equities and half in cash and fixed income. But with interest rates so low, TD Ameritrade is seeing some investors tweak their asset allocation in search of higher yields. TD Ameritrade's Tom Nally. SOUNDBITE: TOM NALLY, PRESIDENT, TD AMERITRADE INSTITUTIONAL, (ENGLISH) SAYING: "We see advisors actually shifting some clients from fixed income into higher dividend paying stocks in order to get the yield that their clients are looking for." And until individual investors see the clarity they're looking for, analysts say they'll probably play it safe for some time to come. Sasha Salama, Reuters