At the US computer games retailer, a multiple of the shares issued were traded at peak times.
(Photo: Reuters)
Dusseldorf “The trend goes with the volume” is a stock market adage. What is meant is that a growing trading volume indicates rising prices. Investors with a short-term investment horizon often orientate themselves on this. This is not a good idea, as an analysis by asset manager HQ Trust shows.
Analyst Pascal Kielkopf examined the behavior of the currently 627 stocks in the MSCI USA index in the period from October 1998 to May 2022. The result: “If a share has a high trading volume, its average return is not only well below average in the current month, but also in the next,” reports Kielkopf.
For his study, Kielkopf divided the shares into six groups: In the lowest category, the trading volume was less than ten percent of the total value of all outstanding shares (market capitalization). For example, if a company was worth ten million euros on the stock exchange, the trading turnover was less than one million euros.
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