The Diverse Rewards of Being an Oblivious Investor

Imagine you set up an automated Twitter account called something like “Inside Investment Advice” and made it alternate every 24 hours between two tweets:

Oh God! Sell! Sell! Sell! Sell!

AND

Oh God! Buy! Buy! Buy! Buy!

You would probably accrue far more followers than you deserve. There seems to be endless demand for panicky, hyped-up advice to TAKE ADVANTAGE OF THIS STOCK TIP NOW OR ELSE YOU WILL BE SORRY!

That’s a reason I love websites like The Oblivious Investor, which recently featured this exchange between a reader and the website creator, Mike Piper.

Q: How often do you calculate your portfolio’s rate of return?

A: Never.

It’s also why I am grateful to Mitch Tuchman (see his investment advice here) who convinced me in the course of one conversation that the people who benefit the most from fund managers who emit a steady stream of advice to sell and buy are fund managers who emit a steady stream of advice to sell and buy.

I am not a financial guru by any stretch, but I am someone whose profession has learned a good deal about how human beings make decisions in the face of complex information under conditions of high emotion. To summarize a complex scientific literature simply: We stink.

That’s a key reason why investment experts like Mike and Mitch preach that you will almost always lose money over time if you jostle your investment portfolio every 20 minutes based on the latest tip, trend or tweet. As a psychologist, I can also assure you that in addition to losing you money, it’s a surefire way to make yourself a lot less happy.

Author: Keith Humphreys

Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College Lonon. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over ten thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.