The death of buy and hold
The conventional wisdom holds that retail investors have been chased out of the stock market by high-frequency traders, whom they feel have turned the market into a casino that gives the pros the house advantage.
Here's yet another indication of that: The average holding period for the SPDR is now less than five days, according to analyst Alan Newman's latest Crosscurrents newsletter, as noted by CNBC. The newsletter also notes that the average holding period for all stocks was almost four years from 1926 through 1999.
These days, the average holding period sits at just 3.2 months. Here's another telling nugget: "In the three months from the beginning of March to the end of May, transactions in Apple comprised one of every $16 traded in the U.S. market, very likely the most concentrated focus on one stock in stock market history."
All that said, the high-frequency trading crowd is suffering these days amid dwindling volume. I've noted that the life blood of high-frequency stock traders is the retail trading masses, whom the pros exist to trade against. So in some ways, we're seeing the revenge of the masses. Retail volume has dried up, and that has some serious repercussions for the high frequency crowd. Still, it doesn't seem like the retail crowd is poised to reassert itself anytime soon, either as day traders or as buy-and-hold investors.
- here's the article