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Portfolio Tinkering Is Good (Says Academia)

Attention is positively related to investment performance

Conventional Wall Street Wisdom Might Be Wrong

Hope everyone's having a good Fourth of July weekend. While you're probably not checking your portfolio this beautiful Sunday weekend, I came across research that might change how you think about that habit entirely.

You know the conventional wisdom: "Don't check your account daily," "Ignore the noise," "Set it and forget it."

Alberto Rossi from University of Maryland and Antonio Gargano from University of Melbourne tracked 18 million page views across 11,000 brokerage accounts and found something cool: The more attention investors paid to their accounts, the better they performed. Both at the portfolio level and on individual trades.

This was so counterintuitive that Rossi admitted, "We were expecting to find no relation between attention and performance, or to find a negative relation."

Source: Gargano, Antonio, and Alberto G. Rossi. "Does It Pay to Pay Attention?"
Data: 11,000 brokerage accounts, 18+ million page views.

This wasn't some survey where people self-reported. They had real brokerage data linking information consumption to actual trades and performance. They could see someone spend 10 minutes reading a Microsoft research report, buy $MSFT ( ▼ 0.4% ) the next day, then track whether that trade made money.

The average investor logged in every 22 business days. The most active investors? Multiple times weekly. And here's the kicker: frequent checkers consistently outperformed the set-it-and-forget-it crowd, even after controlling for investor skill and experience.

Here's what surprised me most: these weren't day traders reacting to price movements. High-attention investors were identifying "attention-grabbing stocks" whose positive performance persisted for up to six months. They were using attention to spot opportunities with real staying power.

The data showed some patterns:

1.Wealthier investors were more attentive.

2. Older investors checked more than younger ones.

3.People holding small-cap, growth, or momentum stocks paid more attention.

That last point matters—>these are exactly the stocks where information actually matters and why I write this dang newsletter everyday.

The researchers could distinguish between investors reading research pages versus those just staring at price charts. Guess which group performed better?

The study doesn't suggest obsessively watching price movements makes you money. It suggests that informed attention—reading research, processing news, understanding what you own—can improve performance.

This makes sense to the folks who actively read this newsletter, you are likely ahead of 95%+ of market participants solely on the fact you are well informed. If you're genuinely interested in learning about companies you own and can handle seeing red numbers without panicking, maybe the conventional "ignore everything" advice is wrong for you.

The finance industry's solution to emotional investing has been to tell people to stop looking entirely. This research suggests that's throwing the baby out with the bathwater. The problem isn't paying attention, it's paying attention to the wrong things.

The key seems to be quality of attention, not quantity. Reading 10-Ks and understanding business models: probably helpful. Refreshing your app to see if your meme stock is up another 2% at 9:36? → probably not.

Happy Sunday.

- John


Disclosure: Always conduct your own research and consult with a financial advisor before making investment decisions. This analysis reflects Pivot and Flow’s views and isn’t personalized advice. All investments carry risk, including complete loss of principal.

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