Retail Investors Say "No Mas"

Everyone reaches their breaking point eventually, and for the retail market participant, it came sometime in October / November.  How many all-or-nothing gap-up and gap-down days can the normal human being watch occur in a row before they realize that the whole thing is bullsh*t?  How many beatings can an investor take in their portfolio holdings when not a single piece of news on their stocks ever even came out?  How much correlation can a person stand when they’re watching 40 of their holdings get jerked up and down every day on rumors and innuendo, thus negating the benefits of diversification and research entirely?

We have our answer, THIS much.  It is this much that they can take and no more.  They’ve said “no mas”, the game no longer appears to even be playable, never mind winnable.  They’re not be selling everything and folding up their tents, but they aren’t coming out of the tent anymore either.  There is a pervasive feeling of why bother in a year with this much volatility and an essentially flat ending price.

Have a look at E*TRADE’s DARTs report for November, released early this morning.  DART stands for Daily Average Revenue Trade, it is the monthly metric we use to judge the health of the online brokerage stocks.  In this latest report, the stench of give-up is everywhere:

*  Daily average trades hit 141,361, below both October (157,700) as well as November of last year (158,770).  This is a 10.4% decline month over month and an 11% decline year-over-year.

*  Net new accounts opened during the month were minus-4115, much worse than October’s minus-2457 and last November’s positive 31.

*  Total customer assets declined month over month as did new net customer assets.

Schwab reported November DARTs this morning and the numbers were similarly soft.  This is what happens when the market becomes a risk-on, risk-off, hyper-correlated (directionally-speaking) hodge podge of nonsense – normal people say “f*ck it” and stop doing anything at all.