It’s the Little Things That Can Color an Investor’s Outlook
By Jason Zweig
Now consider that the websites and apps of many U.S. brokerages and investment firms show losses in hot red (and gains in bright green).
“There’s excitement that goes with that, a little bit of Las Vegas,” says Daniel Egan, director of behavioral finance and investments at Betterment, the New York-based “robo adviser” or automated investing firm. Showing gains and losses in bright colors may make customers more inclined to trade, he says.
“We know that people overreact to their returns over short periods of time,” says Mr. Egan. “Color can reinforce that reaction and double down on the emotion.”