Friday, October 10, 2014

The incredibly shrinking time horizon of stock market investments

Just stumbled upon this very illustrative graph from LPL Financial research showing how the average holding period of stock has fallen from years to days. Long term thinking is over, it seems. 

Here's part of their analysis: 
"The time horizon of the average investor’s investment perspective has changed dramatically over the years, as you can see in Figure 1. According to data from the New York Stock Exchange, the average holding period for stocks in 1960 was about eight years. By 1970, it had slid to a little over five years. By 1980, it had fallen to just under three years, by 1990 to two years, by 2000 to just one year, and in 2010 it reached a mere six months. In 2012, the ETF that tracks the S&P 500 turns over its full market capitalization in trading volume about once every five days".

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