When people discuss the benefits of adopting a ‘do nothing’ approach to investing, I am always reminded of the study where – when left alone in a room – a majority of men preferred to electrocute themselves rather than be stuck with only their thoughts for company.

I am a strong believer that most investors would be better off acting rarely, but being human makes this a far harder task than it seems.

If there is evidence that we are prone to do ‘stuff’ even when that ‘stuff’ hurts us, then the chances of us resisting the pull to act in an environment that demands and incentivises investment activity seem remote.

Of course, this is not the case for certain investors who, mercifully, don’t have to pay too much attention to their investments; they can be happily distracted by other things, such as enjoying their life. I often feel that the most successful investors will be those who can make a few sensible decisions at the start and then spend their time on other things.

Either deliberately or inadvertently, this type of investor makes their long-term investment outcomes a consequence of the things they are invested in – primarily the compounded profits of the companies they own – rather than the trading activity they undertake. (One of these approaches tends to work, and one doesn’t.)

The problem is that it is increasingly difficult to invest this way. Not only are we wired to want to act, but technology increasingly demands our attention, and parts of the industry profit from our activity.

For investors, doing more is becoming irresistible.

One of the key lessons from behavioural science is that if you want to encourage a behaviour make it easy, and if you want to discourage it make it hard. Friction matters far more than we think.

It is difficult to think of many ways in which it hasn’t become far easier to make bad investment decisions. We are increasingly encouraged to do things that are either unnecessary, damaging, or dangerous.

How do we encourage investors to do less for longer? 

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My first book has been published. The Intelligent Fund Investor explores the beliefs and behaviours that lead investors astray, and shows how we can make better decisions. You can get a copy here (UK) or here (US).