Trade, trade, trade / by kevin murray


The New York Stock Exchange (NYSE) regular hours are Monday-Friday, 9:30AM ET to 4:00PM ET, with various off days designated as holidays or half days.  As reported by, the NYSE has a market capitalization of its listed companies of US$21.3 trillion as of June, 2017, and the "average daily trading value was approximately US$169 billion in 2013."  This signifies that for every 126 trading days, the entire market capitalization of the NYSE has been traded, so that the overall turnover of trading volume is nearly 2x times yearly the market capitalization of the NYSE.


It is important to keep in mind that the stocks so listed on the NYSE, typically represent the largest, the most stable, and the most secure blue-chip stocks that are headquartered in America, and quite obviously are not "fly-by-night" operations.  The fact that investors of all stripes are interested in buying into these companies shouldn't come as any real surprise, but what is surprising is that quite obviously for every buyer of a given stock, there must be a seller, so that, inexplicable or not, each day there seems to be an inordinate amount of actionable news, that necessitates the trading into and out of certain stocks, for, almost by definition, trades are supposed to be generated only because each side believes that they are on the right side of the equation.


While on the one hand there may be some rather obvious advantages to a higher liquidity in the market, in the sense, that because of that liquidity, trading and pricing are state-of-the-art efficient; this though must be amended by the fact, that long standing businesses do not have news that is germane to their company to report, each and every day.  Nor, despite all that is talked about on the news, or on the internet, involving tax laws, exports and imports, economies, and businesses have dramatic or even subtle changes that are occurring on a daily or near daily basis, that are changing much of anything.


In point of fact, most companies are forward looking in presenting information to recognized financial news organizations that indicate their projections for revenues as well as earnings on a quarterly as well as on an updated yearly basis.  Those estimates don't change very often, in addition to the fact, that the GDP in America is fairly stable at about 2.5%, give or take a little bit, yearly.  All of these numbers reflect the basic fact, that most stocks do not have all that much to report on that would necessitate a trading pattern of getting in and getting out, as if something sudden and dramatic is going to happen.


What has happened in regards to the reason why trading is at such a high volume in a country that pretty much has set the standard for the modern day stock market, is that the buy and hold strategy, just doesn't generate enough action, it also doesn't generate enough revenue for those that are in the trading business, as well as it doesn't generate enough monetary bonuses; whereas trading in and out, and trying to get a minute edge here and there, does all of the above.  This means rather than seeing the stock market as investing into companies of real merit and worth, this has instead been bastardized into treating the rapid trading of stocks as a legitimate vehicle to make money, which isn't the same thing, and that conflict won't end well.