Odd Lot Stock trades Via WSJ

Tiny Trades Take Record Share of U.S. Market   By Alexander Osipovich, stocks reporter
Tiny trades are taking over the U.S. stock market. Several decades ago, “odd lot” trades—in which fewer than 100 shares change hands—were an insignificant part of U.S. stock trading. Now, nearly half of all trades are in odd-lot sizes. That is the highest level ever recorded and roughly double the level from 2016, according to New York Stock Exchange data. The shift to smaller trades is being driven by the growing number of expensive stocks such as Amazon and the rise of computerized trading strategies that, unlike human traders, don’t think in multiples of 100. The share of trades in odd-lot sizes hit a record 48.9% on Oct. 7 and has stayed above 40% ever since, according to the NYSE data, which cover all U.S. equity trades, not just those at the Big Board. Odd-lot trades were about 30% of all trades at the beginning of 2019 but jumped in the second quarter for reasons that are unclear. Some traders suspect one or more banks triggered the run-up by tweaking their algorithms to execute more trades in odd-lot sizes. Throughout the 20th century, the average price of a U.S. stock hovered around $35, with companies splitting their stocks if they grew much higher, academic research shows. That meant a single “round-lot” trade of 100 shares used to cost the buyer about $3,500.

By comparison, buying 100 shares of Amazon today costs almost $180,000—a heavy lift even for a big investor. And the online-shopping giant isn’t alone in its stratospheric share price. In 2012, no companies in the S&P 500 traded above $1,000 a share. Now there are five: Amazon, Google parent Alphabet, online-travel company Booking Holdings, car-parts retailer AutoZone and home builder NVR.

Many other U.S. companies boast share prices in the hundreds after a decadelong bull market. Meanwhile, stock splits have fallen out of favor, particularly at tech companies where having a triple- or quadruple-digit share price has become a mark of prestige. That has helped boost the average share price of S&P 500 stocks to $131.40 from $43.10 in 2000, according to Ryan Grabinski, a portfolio strategist with Strategas Research Partners. “For some reason, companies think it’s uncool to split stocks,” said Phil Mackintosh, chief economist at Nasdaq.

Are high-priced shares altering your purchasing patterns? Let the author know your thoughts at alexo@wsj.com. Emailed comments may be edited before publication in future newsletters, and please make sure to include your name and location.

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