8/20/2013 6:45 PM ET|
Delete all your investing apps now
Having access to all of one's financial information all of the time is the surest path to a breakdown of investment discipline.
I recently came into the 21st century by getting a smartphone, and it didn't take me long to recognize that if the device were truly intelligent, it wouldn't allow me to access my investments so easily.
Oh, there's no denying that the smartphone can be a powerful tool, but it's a bit like giving the average person a nail gun, capable of quickly putting up a real structure in the hands of a carpenter, but equally capable of requiring a visit to the emergency room when wielded by a novice.
Financial-services companies have rained apps on the public, all meant to help track and manage investments, and if the advances stopped with merely being able to pay bills and observe your portfolio in real time, then most people would probably benefit from the deluge.
But they don't stop there, and neither will consumers using the technological advances.
Fidelity Labs, a part of Fidelity Investments, recently previewed its market monitor service for Google Glass, the first investing "Glassware." Glass is a tiny computer built into eyewear, that Google (GOOG) says makes for faster and easier on-the-go computing activities. Effectively, it's a "heads-up display," the way a fighter pilot's helmet gives them aircraft/flight information without ever having to look down.
It's cool, but that doesn't make it particularly helpful for the average investor with a penchant for gadgets.
My short time with a smartphone has made it obvious that the increase in personal productivity that someone can get by being able to handle chores like bill-paying and more by phone is impressive. Sadly, it's equally clear that constant access to one's finances tends to turn running money into an obsession more than a necessary activity.
Worse yet, the developers of most new applications don't just want consumers to believe their service is worthwhile, they want them thinking that what they've got on their phone is a technological marvel, where there's not the slightest bit of quality trade-off for that constant access.
Thus, fans of the E-Trade baby like to believe that they can act in an instant on the latest news, sitting on their smart phone, when they're in the fray against pros sitting at their desks. As one day-trader I know put it: "It's your smartphone -- and the distractions you have when using it, and the potential troubles you have connecting on the go -- against the terabytes of memory and data I've got at my desk. It's not just that you brought a knife to a gunfight, it's that you think you're well-armed."
Mike Stern, director of financial services at Xtreme Labs, the largest app developer in North America, took it a step further, noting that the professional stock jockeys don't just have the computing horsepower, but "they have technology that was built for them, as opposed to all of the other stuff in the app store that, truthfully, was built for amateurs and that is going to be used in a pretty juvenile way.
"We are still pretty early in the cycle here," he added, "and it's exciting that you can trade on the phone, but that doesn't mean that most people should actually be doing it all the time."
What's more, the constant, non-stop flow of information is going to make people want to use their apps and tools more.
Human brains are wired to process, evaluate and react to information, and the more data fed to your brain about your investments, the more likely you are to react. The more you think your tools are good, the more you think you will benefit from these moves.
If the market takes a nose dive tomorrow and the average investor sees their portfolio value dropping and net worth shrinking by the minute, there will come a point where the moment-by-moment observations will trigger some sort of self-preservation mode, the urge to do something when just standing there would be better.
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The question is, can you walk and trade stocks at the same time? They like to think you can.
Recently I heard a program on the radio that dropped any notion that day trading should even be considered by the average layman. It went on to say the trading wars between the biggest investment firms got so fierce that whoever had the shortest wire to wall street had the advantage to trade first on news. Yes, if their cable was that much shorter, by the speed of light they could get their trades in first and capitalize the most on the news. Eventually Wall Street said look, we'll all give you a computer right in the building so that there's no wire length advantage.
Now, do you still feel lucky trading against these behemoths? You are setting yourself up for failure if you think you can beat the 'house' at this game!
I remember that radio program anytime I get the notion I can make money going in and out of stocks.
Sounds like someone doesn't want the average guy to be able to beat him to the punch on pulling out when the $hit hits the fan... Sorry to dissapoint you, but I made over 50% this year daytrading and setting limits to buying and selling, while I was at work. My mutual funds did pretty good, but not even close to what I did moving back and forth on a volatile market. When the market has huge dips and peaks but ends at the same price every day, you won't make money sitting on a mutual fund.
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