Stock-Market Apps Only Produce Bad Portfolio Returns (WSJ)

Myopia (/mīˈōpēə/): noun. Nearsightedness. (Google definition)

Article published on November 1, 2015 10:05 p.m. ET by SHLOMO BENARTZI

Highlights:

“The more you check how your investments are doing, the worse off you will be.

Google Image

Google Image

They (people tracking their investments with smartphones) tend to make investment decisions based on short-term losses in their portfolio, ignoring their long-term investment plan.

When people are frequently told how their investments are doing—say, if they are given a daily update on their long-term investments, by smartphone or any other digital device—they are more likely to make poor financial decisions and possibly sell at the wrong time.

There’s solid evidence that experiencing short-term losses—noticing that your portfolio is losing money—leads to poor choices.

in a report published in the Quarterly Journal of Economics in 1997, “Providing such investors with frequent feedback about their outcomes is likely to encourage their worst tendencies. …More is not always better. The subjects with the most data did the worst in terms of money earned.”

Reference

The Wall Street Journal

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