Schwab: Retail investors were sellers in December
Retail investors closed out 2025 on the defensive.
For the first time since May, the private clients tracked by the Schwab Trading Activity Index (STAX) were net sellers, sending the index down 0.55% to 48.48 in December, compared to 48.75 in November.
It was also the first time in three months that the STAX didn't out gain the S&P 500, which rose modestly by 1.18% in December.
In November, the STAX was heading for a monthly decline after investors were mostly sellers during the first three weeks, but then investors began buying up large numbers of shares in Nvidia (NVDA), Meta Platforms (META) and Amazon (AMZN) during the last week of the month, sending the index into positive territory.
After "minimal" movement among traders through most of December, they began to sell heavily during the holiday-shortened week that ended December 26.
Rather than viewing the month's result as "a major sentiment change," Schwab instead sees the December activity as likely being an indication of year-end repositioning by retail investors.
"Rebalancing and repositioning were key themes in this STAX period, as we saw clients shed positions in the IT and Consumer Discretionary sectors, two sectors that led November buying, and add holdings in Communication Services, Financials, Materials, & Industrials," Joe Mazzola, head trading and derivatives strategist at Schwab, said in a statement. .
Mazzola noted that Schwab's clients "trimmed into strength," which he described as being "typical" during 2025. They sought to instead buy the dips in some of the underperforming bigger names like Netflix (NFLX), which was the top buy among retail traders in December.
The generational divide among traders remained the same as it had in the previous two months: Generation X, or those born between 1965 and 1980, were the most aggressive buyers, while Generation Z, born between 1997 and 2012, were the most bearish.
Communication services was the most popular sector among buyers, followed by materials and staples. The other sectors that saw net-buys were real estate, utilities and financials.
This was the first time in five months that Nvidia wasn't the top net-buy. After Netflix fell from $110 early in the month to around $92, retail investors began buying it up.
"After the initial pullback, our clients really started to commence buying between $92 and $95," Mazzola said.
Nvidia finished second on the list of top buys, followed by Broadcom (AVGO), Amazon (AMZN) and Alphabet (GOOG).
Tesla (TSLA) and Palantir (PLTR) both went from being top buys in November to being the two top sells in December. They were followed by Intel (INTC), Warner Bros. Discovery (WBD) and Rivian (RIVN).
December brought encouraging positive macro tailwinds: The highly anticipated rate cut from the Federal Reserve, lower-than-expected inflation numbers and a strong third-quarter gross domestic product (GDP) reading.
"Everyone was surprised to see the GDP and inflation numbers," Mazzola said. "That sent the market to all-time highs, but our clients used it as an opportunity to look for underperforming stocks and sell others at 52-week highs."