Comment: Investors know when to hang up

LONDON: Some experiments are self-fulfilling prophecies. Morgan Spurlock gained weight by binging on Big Macs for the 2004 documentary Super Size Me. I became distracted and grumpy after turning on smartphone stock price alerts.

If you keep a close eye on enough assets, you can easily receive 10 or more notifications per hour. If you choose a ringing stock market opening bell as your notification sound, the effect will be especially exciting.

Price information has never been more accessible to private investors. But behavioral finance experts say the abundance of data could make us poorer. It can override rational strategies by encouraging self-defeating activities.

“Most of us carry devices that are capable of ringing if any of our stocks move a certain percentage,” says Ryan Murphy, head of global behavioral insights at data group Morningstar. “Does it make people happier? No. It causes anxiety. A clever framework that improves decision-making? NO.”

FEAR OF MISSING THE OPPORTUNITY

To investigate these suggestions, I set my phone to trigger alerts for 1 percent movements in various assets. These included stocks and commodities I was already tracking, as well as some stocks that were just newsworthy. The second group included Trump Media, an emerging social media company affiliated with the newly elected US president.

The price of the stock with the ticker symbol DJT has more than doubled on large volumes since its September low. As such, it has been hailed as a new “meme stock” that’s talked about on the internet rather than fundamentals.

Halfway through the week-long experiment, my parents kicked me out of the room where they were watching TV. My noisy phone was getting on his nerves.

“Ethereum is on a hot streak!” I told Baskerville, my only remaining comrade. He laid his head patiently on his paws. Dogs don’t care about cryptocurrencies, not even Dogecoin.

So do I. I had no intention of buying or selling the assets included in the alerts; This is one of the many flaws in my methodology. But the experiment proved Murphy’s claim that if you watch price movements intensely, you can fray your nerves.