September 10, 2010

Will Patience Prevail?

From BBC
“Andy Haldane of the Bank of England gave a compelling talk last week about the perennial, epic battle between patience and impatience in the psyche of investors, business leaders and the rest - and what that means for how we should regulate or tax markets and companies. It included some depressing data on the pernicious triumph of short-termism (or impatience): according to research by the Bank of England, over the long term (in this case, more than 100 years), the investor who buys and sells the market when share prices lose touch with the fundamental value of companies, well he or she loses money; but there are decent profits to be had through momentum investing, or being a sheep, by buying when others buy and selling when others sell, in an unthinking mechanistic way.”