LONDON: Some experiments are self-fulfilling prophecies. Morgan Spurlock put on weight by bingeing on Big Macs for his 2004 Super Size Me documentary. I became distracted and tetchy after switching on smartphone stock price alerts.
You can easily receive 10 or more notifications an hour if you follow enough assets closely. The effect is particularly galvanising if you choose a clanging stock exchange opening bell as your notification sound.
Price information has never been more available to private investors. But experts on behavioural finance say the data glut can make us poorer. It can override rational strategies by encouraging self-defeating activity.
“Most of us carry devices that have the capacity to ding if any of our stocks move a certain percentage,” says Ryan Murphy, global head of behavioural insights at data group Morningstar. “Does it make people happier? No. It causes anxiety. Is it a wise framing that improves decision-making? No.”
FEAR OF MISSING OUT
To explore those propositions, I set my phone to trigger alerts for 1 per cent moves in a range of assets. These included shares and commodities I watch anyway, plus some stocks that are simply newsworthy. The latter group included Trump Media, a nascent social media business connected to the newly elected US president.
The share, which has the ticker DJT, has more than doubled in price on huge volumes since a September low. It has accordingly been hailed as a new “meme stock”, trading on internet buzz rather than fundamentals.
Halfway through the week-long experiment, my family threw me out of the room where they were watching TV. My noisy phone was getting on their nerves.
“Ethereum’s on a hot streak!” I told Baskerville, my sole remaining companion. He rested his head on his paws stoically. Dogs do not care about cryptocurrencies, not even Dogecoin.
Nor do I. I had no intention of buying or selling assets featured in the alerts, one of many flaws in my methodology. But the experiment proved Murphy’s contention that if you monitor price moves intensely you can end up shredding your nerves.
