Poor Math Skills in the Media

So, there's a Daily Kos story ("Americans increasingly rejecting the stock market, cuts Wall Street profits") wherein the author asserts that a significant drop in NYSE trading volume ("lowest in 15 years") is due to "mom-and-pop investors" leaving the market.  Hmm. Let's see, using just his data.

Peak NYSE trading volume, in 2006: about 1,900 million trades a day. Now? About 700 million a day. Then a graph with 65% of Americans invested in stocks in 2007, and now 52%.  So the author wants us to believe an exit of 18% of the number of investors is responsible for a 63% drop in the number of trades? That could only be if the "mom-and-pop" investors were trading at MUCH higher rates than the "big" investors. Indeed, if the DK author is right, the "mom-and-pop" investors would have had to been trading at THREE times the rate of big investors. 

More likely, then, is the 2012 Reuters story that asserted, "Gone are the days when Nasdaq was NYSE's only competition. There are now 13 U.S. exchanges and at least 50 alternative trading venues." http://www.reuters.com/article/2012/11/06/us-nyseeuronext-results-idUSBRE8A50AF20121106

As even Fox Business points out, another factor is the Volcker Rule, which curbed internal hedge funds in the brokerage firms.

Overall, the lower volatility is likely a good thing for the investors who've stayed. A train through the mountains rather than a roller-coaster.