Investment decisions take only six minutes to research? Do retail investors need a brokerage platform or an entertainment app?

Do retail investors really have "rational investment"? A recent study from New York University reveals the facts: "Most retail investors spend less than 6 minutes gathering information before making trading decisions." The research team quantified the online investment behaviors of individual investors and found that most people only look at price charts and news websites to complete their research, highlighting the speculative nature of human behavior.

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Have you done your DYOR? Retail investors only spend 6 minutes researching the target before placing an order.

The research team analyzed the web click records of 8.5 million times and 60,000 hours of online activity data left by retail investors using large brokers from 484 American households between April and July 2007, completing this study "The Research Behavior of Individual Investors."

The report indicates that the median retail investor spends an average of only 6 minutes researching each trade, while the average time is 29 minutes.

More than half of the research activity occurs within 24 hours before the trade, especially a few hours before the trade day, with 95% of trades completed within less than 10 minutes after starting the research.

It is also added, "This shows that retail investors mostly make decisions on a temporary basis, rather than through long-term planning, and this behavior contrasts sharply with the months of research conducted by professional investors."

Only a few people refer to risk indicators, Yahoo Finance is the most popular.

Unlike many asset pricing theories that emphasize risk statistics, research has found that very few retail investors actively check risk information or indicators such as β values or volatility. In contrast, the most commonly referenced materials are stock price charts, price trends, and simple news:

Among them, Yahoo Finance is the most commonly used research website, even more popular than brokerage platforms and other professional tools.

In addition, forecasts and opinions from market analysts are also one of the popular types of information, but the proportion of in-depth research on financial reports or dividend-related fundamental information is noticeably low, indicating that retail investors rely more on intuition and visualized information for their decisions.

High market capitalization and significant news capture retail investors' attention.

Research has found that companies with larger market capitalization or growth-oriented enterprises with greater stock price volatility are more likely to attract retail investors for research. For example, Apple, which had not yet entered the top 20 by market capitalization at that time, generated a significant amount of search traffic due to the release of the iPhone, becoming the most researched stock during that period.

The top 20 companies by market capitalization usually receive 63% of individual stock research clicks. Major events such as earnings reports or merger news can also significantly boost the research interest in that company among retail investors.

Researchers point out: "These patterns indicate that the research behavior of retail investors is greatly influenced by market narratives and news events."

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Divergence in investment styles: long-term analysts coexist with short-term speculators

Through further behavioral analysis, researchers found that the investment behaviors and research styles among retail investors vary greatly:

Some investors prefer to delve into financial statements and dividend details, while another group focuses on real-time news, comments in the news section, and short-term signals such as price charts.

It's worth noting that retail investors who enjoy researching speculative stocks often use simple information pages and ignore traditional financial data, indicating that these types of investors' judgments may rely more on "intuition" rather than fundamental analysis.

Deconstructing investment behavior from click records: Do retail investors need an investment platform or an entertainment app?

This research reveals not just data, but also a probing question about the nature of retail investor behavior: "Are they really investing, or are they seeking thrills?"

We observed that the research behavior of retail investors is often not aimed at establishing a rigorous investment theory, but rather driven by a demand for quick responses to the market, even resembling a gambling mentality.

The author extends the original research and believes that under such usage patterns, if the investment platform is too complex or professional, it will lose its attractiveness. After all, for most retail investors, the act of investing is more like an instant entertainment that comes with profits or losses.

This also reflects the design trends of contemporary financial technology, where many investment apps emphasize simple interfaces, rich animations, and real-time trading feedback, successfully attracting more users. However, this design may also weaken users' awareness of risks and the depth of their analysis, leading investment decisions to lean towards emotional and impulsive choices.

As raised by Dragonfly's limited partners @TheOneandOmsy, a question worthy of reflection for the entire financial industry:

What retail investors really need is an investment platform that helps them make rational decisions, or is it an entertainment tool that allows them to feel engaged in the market and react in real-time?

Achieving a balance between these will be a challenge that future investment platform designers and regulatory authorities need to face together.

This article discusses whether investment decisions can be made in just six minutes of research. Do retail investors need brokerage platforms or entertainment apps? First appeared in Chain News ABMedia.