Michael Hudson, an economist and professor at the University of Missouri, recently discussed the average holding period for stocks and foreign currency positions.
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.
Quite a contrast to Warren Buffett’s strategy:
Our favourite holding period is forever.
Short holding periods are the result of computer-driven trading which can lead to strange situations like this, and provide value investors with the market overreaction necessary to create value opportunities (especially event-driven value opps). So, let’s unite in cheering for ever shortening holding periods!
Talk to Frank about Holding Periods
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