Smug, Smirk and Sneer were in top form as they discussed the surprising drop in stock market trading...
Smug, Smirk and Sneer were in top form as they discussed the surprising drop in stock market trading.
Smug: "In 25 of the past 27 days, the number of shares traded on the New York Stock Exchange has been less than the average of 1,023,700 for the last three months. What's up?''
Smirk: "Well, of course, it was good that volume declined when stocks were falling, as they did through most of April and May. Brokers' phones weren't lighting up with calls from investors eager to sell - which would have pushed prices even lower."
Sneer: "Low volume isn't so good, however, with the market recovering. Brokers had got used to big commissions, and they're now worrying about a long dry spell."
Smug: "I'm still waiting for you to tell me why this is happening."
Smirk: "Well, it's hard to put your finger on it. Could it be that brokers and their customers are so fat, happy and sure the market will go up forever that they've already started their summer slide? They'll take four months vacation this year instead of four weeks. When they come back in late September, volume will get back to normal - maybe better than normal."
Sneer: "No, I think it's just the opposite. A lot of people are afraid the market has been too good for too long. They are taking their profits and investing in real estate. I know a few who have bought 10-or-12-bedroom houses at the beach. Folks are even buying apartment buildings in Des Moines, I hear."
Smug: "Come on. The real reasons?"
Smirk: "What really happened was that the biggest customers - who got the richest in the bull market - sold all their stocks to finance their own internet companies.''
Smug: "Oh, you mean stocktoutsgalore.com."
Smirk: "Yes, and dutchtulips.com."
Sneer: "Not to mention anyfoolcandoit.com."
Smug: "The banker who did this must have got into big trouble with his boss for encouraging big-trading customers to ditch the market. But I suppose he'd argue his firm will make it up in fees when these dot.coms go public and start merging."
Smirk: "I just had another thought. Maybe people aren't switching to real estate. Maybe they're buying other things they hope will appreciate more than stocks. Did you see that eBay is going to auction off one of those Honus Wagner baseball cards and that bidding will start at $500,000? Could be folks are looking to eBay for investments instead of Charles Schwab."
Smug: "I hope they don't bid on any fake art."
Sneer: "Sorry, guys, I have the real answer. Customers just aren't getting many phone calls urging them to buy these days. Wall Street firms just finished up an industry-wide ethics course. The poor brokers are tongue-tied."
David Pauly in the Bloomberg New York newsroom
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress