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Anyone know, on average, how much of the daily volume of a trading is done by retail vs. institutional investors?
 

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I don't know specifically, but I would guess that the vast majority of trading is institutional. (And that includes not just the big investing banks, like Goldman Sachs, but also the gazillion mutual fund companies.)
 

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That's always been my guess and assumption too, just curious if these numbers are actually out there. Probably not though. I guess you could break the investors into several groups.

Individual/Retail long term investors (me :p)
Individual/Retail day traders

Institutional long term (big mutual funds with little trading activity)
Institutional day traders

(substitute day traders with short term if you please)
 

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yup it's institution-driven, although the 2009 influx of retail investors into online brokerages may have increased the sliver of non-institutional in the pie chart.

broker i once had used to say When the big boys are coming looggoudbelow.

apparently the proportion of retail investors in the US is now, and historically has always been, higher than in canada.

we have been a nation of sheep & lemmings as jonathan chevreau has lamented. Anyhow he said lemmings.
 

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well...the proportion of Canadians employed in the public sector is hugely more than in the U.S. Arguably that's a contributing factor...
 

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the proportion of Canadians employed in the public sector is hugely more than in the U.S.

I think if you adjusted for health care and the military the numbers would not appear so disparate.
 

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Yes, OGG, of course. My thought was that perhaps it isn't that Canadians are "sheep" compared to the U.S., but that a relatively more significant fraction of Canadians don't "need" to invest, because they have fantastic government pensions. :cool:
 

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we should differentiate here. Where are we putting the large number of retail investors who own nothing but mutual funds. The decisions regarding their investments are made by the fund managers ie the institutions. So are those folks "retail" investors or are they "institutional" investors.

and where are we putting retail investors who own nothing but ETFs. This seems like a gray zone to me.

finally we come to the individual investors who own stocks & bonds directly. These are definitely retail investors.

OGG's point, about including the military in civil service stats, is a good one. If we include the military, would we really have a disproportionately larger government service sector in canada ??

in any event, when all is said and done, CC's figure of 90% institutional participation in canadian stock & bond markets sounds good to me. If we were to include all mutual fund participation and all ETF participation in canadian markets, my instincts would run towards a 95% institutional inclusion rate.

this is one of the reasons why i'm not married to the pure value-finding analytical approach espoused by other capable investors in this forum. Because one can identify the most virtuous little company in canada, and one can buy up its shares in the belief that sooner or later fashion will inevitably stumble upon this stellar investment, but if it's a canadian small cap and if the institutions don't happen to ever fancy your selection then it will languish in forgottensville forever. Which is why, especially when looking at small or microcap canadian companies, i always seek to know which institutions are already in there.
 

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The volume of institutional trades will change each day for each stock and for the market as a whole. Some stocks have no institutional interest.

The big volume bars on a 5 minute chart are generally institutions buying or unloading blocks of shares. This tends to move the stock in whatever direction they are trading.

If you see the institutions unloading your favourite stock it may be wise to follow.
 

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we should differentiate here. Where are we putting the large number of retail investors who own nothing but mutual funds. The decisions regarding their investments are made by the fund managers ie the institutions. So are those folks "retail" investors or are they "institutional" investors.
I believe mutual funds are always retail. Institutional investors have their own individually cusomized portfolios with MER a fraction of a percent. Most of the institutional accounts are pension funds, which are ultimately owned by retail investors, but the investment decisions are made by managers.
 

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i think it's an alice-through-the-looking-glass situation.

investors who own nothing but mutual funds or etfs probably consider their holdings to be retail, seen from their side of the looking glass.

but step through the glass & look at the situation from the markets' point of view. Portfolio decisions for mutual funds & even etfs are made by managers and/or manager-driven fund models. The individual investor has nothing to say other than that he wants to jump on board this train or that train.

seen from the markets' point of view, which considers pension funds, mutual funds and etfs to be institutionally managed, one could easily claim that far more than 90% of stock and bond market activity is institutional.
 

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I think the idea here is to identify what motivates the buy and sell decisions of the market as a whole.

Perhaps it is seen that most institutional investors will act in one way and most retail investors will act in another, but certainly there are many different schools of thought in both camps.

If the investments of individuals rule the market direction in passive sheep/lemming fashion, I would expect that stock prices will inevitably rise during RRSP season. Similarly, if the investments of generic mutual funds (large cap, small cap, etc...) are the dominant force, then again, I would expect the same outcome.

However, if active investors (retail and institutional), looking to exploit this behaviour, have more influence, (and I think the comments above seem to indicate this) then the market direction is anyone's guess. The motivations of the investors are as diverse as fingerprints.

If we are looking to become the few active investors who secretly exploit the behaviour of passive investment activity, it seems that ship has sailed long ago. There are now likely to be infinite layers of intermediary active investors trying to exploit each other's systems as well as the "passive" investors.

Where does this ultimately leave us? Back to square one, invest with the herd, nothing is certain?

As long as their is a fundamental value to the stock (the net assets of the company), and that value will grow with the earnings of the company, I think it will be possible to find a strategy to make money in the stock market. What that strategy is? I promise you will all be the first to know when I figure it out.
 
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