NVDA trades about 100 times per second.
Should you care?
EDITORIAL NOTE: Jan 27 on CNBC with Brian Sullivan, I suggested that market structure should lead public companies to stay with the herd that Blackrock buys.
(And I did a segment for EDGE on The Schwab Network Tuesday with Nicole Petallides.)
Continuing, the answer depends on whether one wants to know how things work. How does gravity work? How might we live on Mars? Read The Martian, by Andy Weir. Wildly entertaining. The movie based on the book is also excellent (as I mentioned here).
And what if something doesn’t work as you thought? Healthcare. Cryptocurrencies. Gold. College sports. Fiat currencies.
AAPL and MSFT trade about 700,000 times per day, about 30 times per second. The average S&P 500 stock trades a lot less but still almost 90,000 times per day, nearly four times per second.
Let’s talk about what you should know and care about, investors and public companies.
What thing made the US stock market the world’s most awesome card shuffler? Regulation National Market System in 2007. The law decreed that any order to buy or sell at the best price – called a “marketable trade” – must be automated.
Enter the machines. There’s a bid. There’s an offer. Never the same. If your trade sits between those two prices, it’s “marketable.” And it must be run by a machine.
The truth about the stock market is it’s a machine-run construct designed to keep things aligned with each other. Stocks are the bedrock. Exchange Trade Funds are derived from stocks. Options and futures are derived from both.
What keeps it all from spinning off into the ether like George Clooney in Gravity?
Machines. Algorithms keep this basket of things aligned with that basket.
Money is pouring into ETFs. According to Eric Balchunas, Bloomberg ETF guru with 394,000 X followers, this month is setting records. There’s a geyser at S&P 500 ETF VOO from Vanguard. (into SLV, the silver ETF, too, but our focus today is stocks).
Meanwhile, trading in options that expire daily, weekly and monthly (there’s not a day without some expiration on it, CBOE shows) is $4 trillion of notional value, dwarfing the $900 billion in stocks daily. Only currencies trade more.
The machinery keeps stocks, ETFs, options, aligned.
Like this: ETFs need underlying stocks but don’t buy them in the open market. They get them from brokers like Morgan Stanley in large blocks (from where, one wonders). We don’t really know what’s in that “basket” called creation units.
Then Morgan Stanley et al sell the ETF shares to the investors hosing money into ETFs.
In the stock market, ETFs are like tokenized securities that have no more value than a token but are meant to track a basket of stocks.
Firms like Jane Street oblige, trading ETFs versus stocks so that prices continually change like seismographs.
Consequently, trade-size has plunged. It’s down to 80 shares in the S&P 500 and has been as low as 56 shares in December 2025.
Because it’s not investing. It’s arbitrage. It’s why you can’t trust futures anymore.
If the aim of traders is to align this security with that one, tiny frenetic increments are low-risk and economical. Exactly as the data show.
And then you’ve got options trading on both stocks and ETFs. Options expiring daily are 60% of S&P 500 volume. And all those things need to stay less than 2% apart — and way less to keep regulators happy.
It turns into trillions of dollars.
Is it investment? In the sense that your financial advisor has constructed a 60/40 portfolio for you with 60% of your money going to stocks via ETFs, yes.
In the sense that the money goes into the stock market, no. It goes to Blackrock et al. The creations and redemptions of ETF shares don’t occur in the broad market. They occur outside it, without competition, in large blocks, between two parties.
Ironic isn’t it? All markets at root have a buyer and a seller. And a price.
But the stock market has a lot of activity that’s mainly about the price. Not the buyer or the seller.
Public companies: This is why your earnings reports have become volatility battlegrounds. You introduce new information. It caroms like a cannonball through this machinery. It boots you from the ETF basket and misprices your options.
And it’s why things like the FOMC press conference today can detonate like atomic bombs. Information floods automated algorithms pricing things, and stuff goes haywire.
I think it’s a terrible idea to jam options, ETFs and stocks into the same market. They don’t work the same way. They’re unequal. They shift the focus from capital formation – raising money, creating value – to trading prices.
And that’s speculation. We used to know as rational beings that speculation of more than about 10% reflected inefficient markets. What about 90%?
And now you know how it works. To navigate it, let us help you change your strategy, public companies. And investors, remember that all bubbles deflate. The current market cycle is the longest since the one that ended in Dec 2021 before the 2022 bear market.
