“Is There Anybody In There or Out There?”
Posted by Larry Doyle on September 19, 2010 7:08 AM |
In light of the ongoing decline in equity volumes, I found a short piece in this weekend’s Wall Street Journal to be of special interest. Jonathan Cheng writes, Hello, Is There Anybody In There?
Are trading volumes ever coming back? With options expirations and index rebalancing on the agenda, today could be a decent one for trading volumes, which Peter Boockvar of Miller Tabak notes haven’t hit the 5 billion shares mark in NYSE Composite volume since July 16. Mr. Boockvar cites “confusion” as the culprit, given all the economic uncertainties facing investors.
Rick Bensignor, chief market strategist at Execution Noble, however, chalks it up to something perhaps more fundamental: there aren’t many investors out there to begin with, which he says are likely to keep volumes anemic for the foreseeable future. Here’s his tally:
1. Retail investors, hurt by deep losses in the past few years, just aren’t interested, plowing their money instead into bond funds.
2. Wall Street is shutting down their proprietary trading desks, or reining in their activities sharply.
3. Hedge funds are disappearing — by Mr. Bensignor’s estimate, there are 1/3 fewer than there were two years ago.
4. Anyone else still interested in the market got a nice spook with the May 6 flash crash.
No wonder it’s quiet out there.
What does it all mean?
I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.