Charles Schwab Corp (NYSE:SCHW) has just had its busiest quarter in history, averaging more than 550,000 trades per day during the first quarter of this year. The burst in volume pushed its net income up 58% during the quarter, and the brokerage added $34.2 billion in net assets, for a total of $2.31 trillion in client assets.

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Charles Schwab beats 1Q14 consensus estimates

Charles Schwab Corp (NYSE:SCHW)’s net income rose to $318 million or $0.24 per share in the first quarter from $198 million or $0.15 per share in 4Q14. Revenue increased from $1.29 billion to $1.48 billion over the same period. The unexpected spike in revenues driven by trade volume beat analysts’ consensus of $0.22 per share on $1.47 billion, and the company’s share price has risen more than 3% to $26.12 in trading today.

In addition to the rising trade volumes, Charles Schwab Corp (NYSE:SCHW) has done a better job of selling its consulting services, with about half of its client paying for at least some basic advisory services (as a retail focused brokerage, many of its clients opt for bare-bone, low fee services).

Inflows from new investors often precipitate a market top

Charles Schwab Corp (NYSE:SCHW) CFO Joe Martinetto said that the high volume isn’t surprising because market gains over the last year or so make people want to get back into the market, but for people worried about a market top or the threat of an equities bubble that’s a cause for concern.

By most measures US equities are expensive right now because multiple expansion has gotten ahead of earnings growth, but that in and of itself doesn’t mean there’s a problem (though it might be a good reason to look for value stocks elsewhere). The problem really comes when people outside the market start buying in to get what they see as easy money, and then divest just as quickly during a correction. Strong inflows from inexperienced investors can drive stock prices far past what can be justified even with an optimistic growth thesis.

“We also saw a steady pace of planning conversations, as an increasing proportion of clients engage with investing as a long-term process, not a moment in time,” said Charles Schwab Corp (NYSE:SCHW) CEO Walt Bettinger.

Hopefully this is true, and not everyone who is getting into the stock market now expects 2014 to be a repeat of 2013. In that case the increased activity could be a sign of greater confidence in the market, and not unrealistic expectations about what will happen in the short term.