Equity trading volumes are tipped to remain relatively flat in 2015 after a good, but not great 2014.
According to IRESS data, trading volumes across the Australian Securities Exchange and Chi-X were sitting at around $2.38 trillion for the year up to December 12, with 10 trading days still remaining before the turn of the calendar. That figure has been boosted by a slew of company floats including that of Healthscope Ltd (ASX: HSO), Regis Healthcare Ltd (ASX: REG) and, of course, the $5.7 billion float of Medibank Private Ltd (ASX: MPL).
While trading volumes this year are slightly below the $2.5 trillion recorded in 2013, they are well below the levels recorded in 2007 and 2008 at $3.3 trillion and $2.9 trillion, respectively. Factors such as the volatile Australian dollar, shaky investor confidence and heavy fluctuations experienced in the stock market may be impacting volumes. Should interest rates drop, we could also see more and more investors flock to equities markets which would see volumes increase.
As quoted by The Australian Financial Review, Chris Williams, co-head of equities at UBS, said: “Next year, the view would be not materially different… The biggest driver will be what happens to interest rates in the developed world.” He noted that a 5% increase or decrease on 2014 trading volumes was possible.
An important takeaway for investors
Investors should note that true investing success does not require frequent trades. In fact, the biggest profits come to those investors who buy and hold for the ultra-long term, making only a handful of buys (or sells) each year.
As Warren Buffett once quipped: “An investor should act as though he had a lifetime decision card with just twenty punches on it.”
Understandably, most investors will make more than 20 trades in their lifetime, but the principle remains the same: Every investment decision should be made with a lot of forethought, as if the decision made was one you will have to live with forever.
If you only make one trade in 2015, make it this ultra-promising stock…