Professor Stevenson in his comment of my recent paper on odd-lot trading introduces some interesting additional odd-lot data for both the NYSE and the ASE. His criticisms, however, in my opinion are without merit. First, in my paper I state clearly that due to limited financial resources the study concentrates only on the NYSE. Therefore, the odd-lot participation rate on the ASE is not calculated. Although Stevenson's ASE data are interesting, I fail to see how these ASE data raise serious doubts as to whether my statistical significant results between NYSE odd-lot purchases and sales and ASE odd-lot purchases and sales have any meaningful interpretation. Secondly, Stevenson quarrels with my observation in regard to odd-lot short sales that “odd-lotters have become somewhat more speculative and perhaps more sophisticated in the 1960's.” Again I fail to see why a shifting of marketplaces by small investors, which he mentions but does not prove, makes my statement less valid. Thirdly, because of the nature of the distributed lag model, I do not see why I cannot conclude that “results suggest that odd-lot and round-lot volume did affect each other.” Of course his interpretation that odd-lot and round-lot volume tend to move together is also valid. Finally, my data are through 1967, and the two odd-lot dealer firms did not merge until 1970. In short, as Stevenson's criticisms are all minor, he is making a mountain out of a molehill.

By examining the annual data from 1937-1967, we found that odd-lot volume has become loss important in the market in recent years. Although the odd-lot trading volume has increased steadily in the absolute term since the end of World War II, the share of odd-lot trading in relation to total round-lot volume has been declining. By 1967, the percentage of odd-lot volume to round-lot total sales was down to 11.6 percent. The same data also indicate that odd-lot short sales have increased moderately since 1962; however, the volume is quite insignificant. The average of odd-lot short sales to total round-lot short sales for the 31-year period is only 1.9 percent. Odd-lotters were also found to be net purchasers during this period (1937-1967); however, odd-lotters have turned into net sellers in recent years. The total net sales from 1961 to 1967 amounted to 22.2 million shares, which is approximately 25 percent of the total net purchases of the entire period (1937-1967).