Monday, April 30, 2012

Income Gap Hindering Trading Volumes

Recently, there has been a decent amount of coverage on the lack of volume within the trading markets. The consensus theory is that there is a lot of money sitting on the sidelines waiting for the right moment to invest. The conversation also suggests that the money is not yet invested because there is a lack of regulation direction. That probably is correct. But does the income gap have a part in this equation?

The fact that the rich have more to invest in the stock market and don't even while balance sheets and profits have never been better should be an indication that something is amiss. The extra money being made by the rich is going into safer instruments (i.e. bonds) than stocks because the money doesn't need to be invested at a level of risk normally associated with equities. Combine this with a growing number of families that lack the income to invest, and you might have lower volumes.

Having a lower volume right now is not good. But when the rich don't need to and the rest can't, what else is supposed to happen?


Jammer said...

What do you think of "Sell in May, and go away?"

countertops san diego said...

Still not bad though. Big is still huge.

Stock tips said...

bad though. Big is still huge.

Daryl said...

The land of opportunity has been left without. Maybe the government should legislate higher

Commodity Tips said...

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Penny Stock Blog said...

How can their be a shortage of saving when the top 1% receives almost 25% of total income.

Equity Tips said...

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Thats an interesting post. Nobody would ever have thought of trading volume having anything at all to do with wealth inequality.

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