Sunday, May 20, 2007
A reader left a comment noting some stats about odd-lot trades being relatively low and taking that as an indicator that a lot of retail investors are sitting out this rally.
This could be the case but I had a thought about the utility of this as an indicator. The number of do-it-yourselfers that can put $10,000-$15,000 into one stock is much greater today than it was ten years ago.
Given that the vast majority of stocks trade below $100 I am theorizing that there is much less demand for odd lots than in the past and that demand can only decrease in the future.
If this holds any water it is an example of evolution for a stock market indicator. If one indicator can evolve than I suppose others can too.
A short while back I mentioned having heard from WisdomTree that five more ETFs were coming quickly, well make that three. I am on some sort of distribution list (nothing special, I think it comes with having registered at their site) and the latest one says to look for International Real Estate (DRW), Emerging Markets (DEH) and China (DCF). DRW and DCF are both dividend funds but I am not sure about DRW.
I shaved off a little bit of another stock on Friday in addition to selling Sinopec (SNP). Some clients own Marathon Oil (MRO). A few folks had owned it long enough that it become too large for their respective portfolios. It was a modest pairing back for only a few people. It seems like the stock has become more volatile since I first bought the stock a couple of years ago and this seemed like a good time to reduce the position.
Tom Lydon found this link to a WSJ article saying that we should expect a lot more fixed income ETFs was well as further product expansion in other areas too. If correct I think this is a positive but I do concede that some people will misuse them and hurt themselves.
A lot of products will come but I think that we are a year or two away from more funds closing due to a lack of interest by the investing public.
Things like the dividend capture I mentioned the other day along with buy-write index funds and single country bond ETFs are what I would like to see the most. It looks like we have dividend capture coming but I can't seem to make any headway on the other two just yet.
The picture is of the gas station in Kalaupapa on Molokai.