Broker Check

Too Much of a (Seemingly) Good Thing

April 17, 2023

Is it possible to have too much of a (seemingly) good thing? Yes, it is possible. Everyone can come up with at least a short list of desirable things they could do that would not suit them if they had unlimited access to it. Some are obvious, some not so obvious—a simple example of the obvious . . . the sun. 

Just about everyone loves sunny days and spending time outside. Too much sun is not good. From sunburn to drought, long uninterrupted exposure to the sun can be downright dangerous, even deadly. Wine could be another example, even if it’s hard for me to imagine. Any alcohol should be consumed in moderation, if at all. Many of us have all witnessed the embarrassing effects of someone that has had too much, and it doesn’t matter what the bottle costs. The results are the same.

Where has this sort of thing shown up in personal finance? Two examples come to mind. Both evolved over decades. At one point in history, neither was practically accessible to the general public, and now both can hardly be avoided. Today, access to markets and information could be considered too much of a good thing. 

The democratization of markets (everyone with a phone can open and trade in an investment account) and the 24-hour-a-day, minute-by-minute, digital news cycle (everyone with a phone could have their day hijacked by the flow of information) has done little to help the average investor. Both things, often positioned as progress, have done little to nothing to enhance the average return in investors’ portfolios. 

The average investor’s performance has lagged behind the markets for decades. I-phones with scrolling tickers, news alert pings, trading platforms “with access to research,” low-cost funds, and ETFs have NOT changed the outcome. The number one reason investors underperform is poor decision-making. Which the financial services industry calls “investors’ bad behavior.

The most recent Dalbar study found that the average investor return gap doubled in 2021 ( Aug. 25, 2021). This study compares the US equity market returns with the average US equities investor. Dalbar has been engaging in this research for 27 years. The year-to-year results are very similar, but they just got much worse.

My takeaways…. Technology is a tool, not a solution. And one of my personal favorites is, “just because you can, doesn’t mean you should.” You know, like some people with a driver’s license. Having constant and instant access to information is positively correlated to improved investment performance for the average investor.

We would all do ourselves a favor and lower our collective blood pressure if we limited our time in front of any screen, particularly ones giving market updates and predictions. Then reallocate that time to more meaningful and productive endeavors… basket weaving.


Brian Pitell 

BPG Planning