I understand that all resources are finite, but I never thought that it would apply to human gullibility and stupidity, indicating a continuing fall in trading volume.

His explanation is that we are finally running out of rubes willing to trust Wall Street:

The uptrend bit is easy: volumes, at least until 2009, always went up over time, especially when they were helped along by things like decimalization and high-frequency trading. But what explains the downtrend? It’s not the decreasing number of stocks: that might explain a bit of what’s going on in the US, but it wouldn’t explain the rest of the world.

Instead, I think that what we’re seeing is the slow death of the stock-market investor — the kind of person who subscribes to Barron’s, idolizes Warren Buffett, and thinks of stock-market investing as a do-it-yourself enterprise. During the dot-com bubble, lots of people thought they were really smart when it came to stock-market investing, and then after the dot-com bubble burst, the rise of discount brokerages helped encourage new people to step in to the market and try their luck.

Nowadays, however, the message is sinking in: it’s a rigged game, you can’t win, and you’re better off with a passive strategy.

It is very hard for me to believe, but the idea that Wall Street is finally running out of hard-working, regular folks who are willing to be cheated is not an unreasonable thesis given this data.