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"Its like having guests crash a party. There is less food to go around for everyone else," Jason Greene, an associate professor of finance at Georgia State Universitys Robinson College of Business, told The Journal.
Besides diluting returns, short-term trading jacks up transaction prices and may cause some portfolio managers to have a bigger horde of cash on hand than they otherwise might. Obviously, in a good market, the more money on the sidelines not going to work in the equities markets, the lower the return.