That massive 500% jump in stock market trading since the 80s? It’s basically a mirage that doesn't actually help long-term investors.
March 13, 2026
Original Paper
Rethinking Volume: The Illusion of Liquidity
SSRN · 6283218
The Takeaway
This research reveals that while gross trading volume has exploded, 'net volume'—the actual movement of stocks between long-term portfolios—has remained completely flat for 40 years. This means that despite the appearance of a hyper-active, hyper-liquid market, the ability for a regular person to buy or sell a stock without moving the price hasn't actually improved since the 1980s.
From the abstract
<div> <div> <div> <p>We document a striking fact: While gross trading volume has increased fivefold since 1980, net volume – trading from persistent portfolio reallocations, which excludes transitory round-trip trades – has remained largely unchanged. Our evidence suggests that the rise in transitory roundtrip trades is driven primarily by high-frequency intermediation. While this activity has enhanced high-frequency liquidity, it has not materially changed long-term liquidity. Consistent with t