From Superforecasting: The Art and Science of Prediction by Philip Tetlock and Dan Gardner: Look at a typical day in the stock market. The volume and volatility of trading are staggering. The reasons for that are complex … but it seems clear that at least some of it is due to traders overreacting to new information. Even John Maynard Keynes, who urged people to change their minds in light of changing facts, felt that "day-to-day fluctuations in the profits of existing investments, which are obviously of an ephemeral and nonsignificant character, tend to have an altogether excessive, and even an absurd, influence on the market". "Many investors move from stock to stock or from mutual fund to mutual fund as if they were selecting and discarding cards in a game of gin rummy," observed economist Burton Malkiel. They pay a price. Many studies have found that those who trade more frequently get worse returns than those who lean towards buy-and-hold strategies. Malkiel cited a study of 66,...
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