How Individual Investors Can Do Better

Access to data. Free trading. In many respects, individual investors have never had it so good. Yet only 15%-20% of retail investors consistently beat the market, at least according to one study.

Austin Moss is a professor at the University of Colorado, Boulder, and he studied one broker’s attempt at enhancing trading via push notifications – and found out that while they increased trading by 25% shortly after the notification, they didn’t really move the needle for investor returns. 

In this video, I talk with Austin about his research, about why gambling in the stock market is still better than gambling in the casino (a glass-half-full perspective I never thought of before, but which makes sense), how Austin would design the ideal individual investor ecosystem (hint:  increase transparency relative to benchmarks) and more along those lines. 

Austin has also researched ESG, and – in research cited by the US SEC in its new climate disclosure rules – found that retail investors don’t react to companies’ ESG disclosures, but do react to other disclosures.

In other words, investors say they care about ESG, and presumably do in an abstract sense, but don’t seem to be trading based on it on a granular level. 

Click here or on the image below to watch our chat.


How Individual Investors Can Do Better

This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.

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