It was one of a series of studies by Brad Barber and Terrance Odean in which they studied records of 150,000 brokerage accounts to better understand how investor behavior influences investment returns. The investors studied had been beating the market by an average of 2 percentage points a year before they moved online. But as online traders, their performance lagged the market by 3 percentage points a year. The slow die first. So, yes, Yogi, that is the downside.
People spend too much time tinkering with their investments, and they trade too much.
That's not healthy, Haelan. I asked our community regulars how else their behavior changed when they went online. Without it, investors would be looking up months-old data at the library and watching the talking heads. And brokers would still be profiting on information arbitrage because they had the scoop and we didn't. So the Web democratized investing.