Long Term Investors

(Via Naked Capitalism)

Michael Hudson tells us that investors are hanging onto stocks and foreign currency investments longer.

Now the bad news:

Take any stock in the United States. The average time in which you hold a stock is--it's gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts--it's up now to 30 seconds, up from 28 seconds last month.

Think about that for a second. What kind of market efficiency is there when positions are held for less time than it takes to describe them?

Here's a more granular observation from The Daily Finance's Peter Cohan:

The market is now controlled by short-term traders, rather than the long-term investors for whom these arguments might have some relevance. Specifically, 70% of trading volume on the major exchanges is conducted by high-frequency traders who hold a stock for an average of 11 seconds. Only a handful of market players have the real-time data needed to make these short-term trades.

That's 70% of trading volume happening at a rate that outstrips humanity's ability to absorb, comprehend, analyze, and react.

Remember that figure the next time some idiot tries to tell you that the Dow's latest hiccup is due to X or Y in the news.