How many financial planners or brokers out there talk to their clients about the need to take a long term perspective on the markets? The investment professional researches a company's financial reports, reviews market trends and recommends a "buy". The Average Joe makes an investment in the company based upon this information.
There is a study I recently came across that deals with the NYSE's pending merger that follows the volume of trading in the exchange. It appears that 70% of the daily volume of the NYSE is held for around 3 minutes. A few years back the Big Board did 2.5-3.0 billion shares a day in volume. Now the volume is about 1/3 of that level; and roughly 70% of this number is only held for 3 minutes. No doubt the big hedge funds and high frequency traders are the main drivers of this phenomenon and are affecting the market place. Are these high tech gamers affecting volume? Yes. Are they affecting value? Probably. Is that bad? Not necessarily. Value/stock price can be improved with attention.
I believe in they system. I have to. I'm a broker. Does the US economy need to believe in the system...absolutely.
Can the Average Joe make money in the stock market if your philosphy is to be a long term investor? I think you still can. Check back tomorrow...I'll have some suggestions for you.
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