Why is it that the volume leading up to about 2001 was substantially higher on average than it is today? Since we are experiencing a huge aerospace boom cycle, could one say that TIE will not come close to peaking at least until the volume is comparable to the last cycle on the chart (assuming no catostrophic events)? Or does past cycle volume tell us nothing about the current cycle and what it's potential may be? Thanks in advance.
From 1996 to 2001 TIE had coverage from major analysts - Solomon Smith Barney, and the like. After 9-11, nearly all analysts dropped the coverage. Much lower investor profile, probably explains some of the decline.
That's ok. Too much visibility just beings in the noise traders who act on the whim of every word spoken by the analyst. The noise traders know nothing about quarterly reports or future earnings potential. TIE will converge to its correct valuation eventually with or without the noise traders. It will just take a little longer but the ride will be more smooth.
If you're referring to trading volumes, there was a 1-for-10 reverse stock split on February 18, 2003. I think that's the main reason you see subsequent microscopic volume compared with prior history on this chart.
Having said that, as of September of 2005, we had gone through a 5-for-one split (Aug. 27, 2004), and then a 2-for-one split (Sep. 7, 2005) which should get us back to about the same number of shares outstanding since last Sepetmber as there were before February of 2003.
But you've still got an interesting point. Recent volumes still don't appear to be anywhere as high as the 1997-2002 volumes before the reverse split. Perhaps the "float' is significantly lower. Harold Simmons, of course, controls more now than he did back then (I've not gone back to see just how much more, although that would not be difficult), and perhaps a higher percentage of total outstanding shares is now held by institutions than in the old days, but that's just a guess. But lower "float" is likely part of the answer to your question, since last September when the share splits put the total shares outstanding back to a level comparable to the old history.
An interesting observation. I'm not sure what it means, though.
P.S. to the issue of lower trading volumes now than before 2003, Harold Simmons controlled 30% of TIE's shares at year-end 1997, 39% at the end of 1998, and 47% by the end of 1999, and trading volumes were still relatively high through the end of 1999, apparently not too materially reduced by Simmons' purchases.
Trading volumes declined in 2000 as the stock market peaked and began its protracted decline. Simmons had increased his control to 48% by year-end 2002, when trading volumes were still pretty high relative to today's levels. Simmons' 48% stake at the end of 2002 was not too dissimilar from his present 54.5% stake.
So I don't think Simmon's buying in of the "float" is the main answer to why trading volumes are so much lower than in 2002. That leaves higher proportional ownership by institutions as the likely answer, I'd guess. And of course, if the "float" is significantly reduced (assuming institutions are not actively trading their positions), this is part of why TIE is so volatile, perhaps more so than several years ago. Or perhaps not.
If I had to guess, I would say that there were more shares to be traded back then because Harold Simmons had not bought the 9 million shares he owns today. Also, back then the stock was $10 a share so people could afford to buy 7 times as much as they can today. However, it seems Harold Simmons filed as statement of owner ship of 8,364,310 under his wife�s name back in Sept. 2004. So I suspect that he received newly issued shares directly from TIE for cash paid directly to them. But it�s all relative to today�s price so what I said should still be true.