Interesting speech by a Bank of England official about the demise of the notion of a long term time horizon in investing, a sentiment I would tend to agree with. It is a constant battle to get traders to think about where they will be next year ass opposed to where they will be will be tomorrow. My thoughts on the matter tend to swirl around the notions of instant gratification and the shortening of attention spans that are a consequence of the chances in the way we communicate. Take this blog as an example in years gone by I would have had to have this printed and then mailed to you – a process that at best would have taken a week.
I remember during the 1980’s seeing people lining up outside the offices of publishers who produced tip sheets in the belief that they were getting in early. Little did they realise that these sheets had taken a week to produce. Now it it only takes a few keystrokes to tell the entire world that I am long/short XYZ and at what price.
From the article –
is the world becoming short-sighted? As individuals, it sometimes feels that way. Information is streamed in ever greater volumes and at ever rising velocities. Timelines for decision-making appear to have been compressed. Pressures to deliver immediate results seem to have intensified. Tenure patterns for some of our most important life choices (marriage, jobs, money) are in secular decline.1 Some have called this the era of “quarterly capitalism”.2
These forces may be altering not just the way we act, but also the way we think. Neurologically, our brains are adapting to increasing volumes and velocities of information by shortening attention spans. Technological innovation, such as the world wide web, may have caused a permanent neurological rewiring, as did previous technological revolutions such as the printing press and typewriter.3 Like a transistor radio, our brains may be permanently retuning to a shorter wave-length.
This is a nice juxtaposition to the previous article on HFT. The rest of the article is attached here