Are You Checking Your Portfolio Too Much?
When was the last time you picked up your cell phone? There is a good chance it has been in the last hour. The answer to the question may seem inconsequential, but it can tell us a lot about how behavioral biases can directly affect your decision making process, both in investing and in life. Some recent research has suggested that being on our devices (phones, computers, and tablets) can be bad for our health in the long run. However, our brains are hardwired to discount that information and satisfy the need for instant gratification, whether that is checking email, opening an app or just seeing if anything has happened in the world over the last 10 minutes. The behavioral finance term for this concept is hyperbolic discounting. It is defined as the need for people to choose smaller, immediate rewards rather than larger, later rewards.