Not that any of us who trade equities weren't already aware. http://finance.yahoo.com/news/citigroup-layoffs-target-declining-stock-224439897.html
I think this kind of stuff is cyclical, but to be in today's environment with 1996 volumes is pretty crazy. I was thinking that maybe we're in a lull currently because no one wants to take any drastic moves until the market gets over this fiscal cliff situation. Why would any manager put on a huge position with so much uncertainty on the horizon? The mystery was just that after August, things fell so hard and never quite recovered. I'm attributing this to end of year uneasiness, but if the situation doesn't get better by early 2013, I think it will be time to exit the business.
I agree with all your comments. But there is one area of real concern I have, and that's the increasing dollars going into indexes and ETFs, moving money away from direct trading of equities. That's a new phenomenon, one we haven't faced before. It may help to explain the relative intraday flatness I've seen in tracking about 800 equities daily, and it could be a real threat to equities trading long-term.
Care to comment on how you calculate flow into indexes and ETFs? It's hard to hate ETFs, though. Almost all of my big losses in the market come from single-stock news events. When XLF blows up for a few seconds, it hurts, but I can usually recover. When some individual stock goes off the rails, it can wipe out a week's worth of PnL. Although, the big ETFs are all priced to perfection by HFT, but a lot of these junk ETFs have virtually no volume either.
issues are deeper in my opinion. all the corruption and payouts and bonuses eroded confidence in stocks. Company A buys company B, paout for managemeet large. These guys change position to company C and then company C buys company A and returns favour..... if this is allowed, then one gets terrified how much insider trading really going on as there seem to be no protection. And you as a participant pay for it. nope, this will not reverse, until major changes are implemented to return retail confidence.
Not true. ETF's are always holdings for other stocks or securities. ETN's even have holdings, although not directly. Buying SPY is buying 500 companies at once. Buying GLD is buying gold. If people use ETF's for longer term trading, this just means more people are on a larger time frame, not investing in stocks anymore. The reason why volume is light is because markets are efficient, QE reduces vol and many once-large hedge funds or banks (Lehman) have taken deserved losses and left the game. It is not because of HFT. HFT makes markets a little more efficient, but HFT does not generate the kind of alpha that larger time frame traders generate. When considering that HFT firms often fail or barely break even, HFT overall do not contribute significantly to real market alpha. HFT producing allot of volume has nothing to do with alpha.
Bond inflows are at record highs and equity outflows are at record lows. The lack of retail participation is the biggest reason you see the market environment you do. Retail will come back into the market...when, who knows? Seems like we need more people to get shaken out of this industry and market before the next secular bull starts.