In the latest issue of Glenmede's Monthly Insights commentary, Jason Pride, director of investment strategy for the firm, examines John Maynard Keynes' likening of professional investing to a beauty contest, in which investors are not "choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks prettiest." Instead, Keynes wrote, "We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be."
Using this assessment, Pride argues that "markets seem more removed than usual from fundamentals." He notes the way markets tend to rally when a monthly employment report is positive and go in the opposite direction when the report is negative. He also presents a chart below that "traces a clear, secular decline in the average holding period of stocks."
To read the Pride's full commentary, click here.