Investor Holding Periods Back At 1920s Levels

The average investor holding period of NYSE stocks in recent decades has declined to levels previously seen in the 1920s. The evolution of technology has played a large role. The widespread use of algo driven automated trading programs has certainly driven down holding periods and fundamentally changed how stocks trade.

The internet has made it ever easier for retail traders to trade stocks, whose presence played a role in the internet bubble and is currently evident through the trading of GME and TSLA. Indeed, the current generation of trading apps has changed the mindset of many users from one of investment to casino-like speculation.

Holding periods at these levels have historically been associated with unusually high market volatility which is what we anticipate for the 2020s. While volatility can be disconcerting, we expect it to offer significant opportunities for prepared investors in the years ahead.

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