Trading Treadmill

Trading Treadmill….avoid the hype
I ran across a recent press release this morning from Business Wire that announced some activity for Charles Schwab Corporation in August. I found it interesting that there was a large in-flow of new assets that came into Schwab about $62B and what I really found curious was the amount of trades that were taking place. Trades are up substantially in August about 57% in and 35% in July. Now what reasonable explanation can justify this amount of activity? Why is this happening? FEAR, FEAR, FEAR!

There’s no reason for the market to have the volatility that it has now outside of political uncertainty. Companies are profitable, dividends are good, lots have cash sitting on the sidelines until more clarity about the current state of government spending etc. So right now what we’re seeing is people squandering their retirement life savings away on trading and the fees that it creates. This is just one firm, imagine the hundreds and thousands of other firms that are experiencing this kind of trading volume. It saddens me to see this amount of trading happen because it costs the American public billions of dollars when they should just stay with the well diversified portfolio and hold it and rebalance and realize that investing it a long-term endeavor. Check out the link to the Business wire article.

http://www.businesswire.com/news/home/20110915005608/en/Schwab-Reports-Monthly-Activity-Highlights