In 2022, a study published in the Journal of Finance found that stocks seeing the sharpest single-day surge in Robinhood ownership went on to post average abnormal returns of about negative 3% over the following five trading days, widening to roughly negative 6% during the most extreme herding episodes. The pull toward these stocks wasn't a signal worth acting on. It was attention.
Two Decades of Evidence
Behavioral economists identified the underlying pattern well before smartphones made it easy to act on. In 1995, Shlomo Benartzi and Richard Thaler described what they called myopic loss aversion: the tendency to feel losses more sharply the more often a portfolio is evaluated. Thaler went on to win the Nobel Prize in Economic Sciences in 2017 for his broader contributions to behavioral economics. Checked daily, a portfolio looks down about as often as it looks up. Checked annually, the same portfolio shows its actual trend. Investors who check constantly end up more risk-averse than their goals call for, pulling back from the positions that would have served them best.
A related idea, the disposition effect, was named a decade earlier. In 1985, Hersh Shefrin and Meir Statman described the tendency to sell winning positions too early and hold losing ones too long, driven by the discomfort of watching a gain shrink or admitting a loss is real. Both ideas build on the loss-aversion research of Daniel Kahneman and Amos Tversky, work that earned Kahneman a Nobel Prize of his own in 2002.
This isn't a new problem, and the Robinhood finding is only its most recent evidence. Brad Barber and Terrance Odean had already documented the underlying pattern in 2000, in a paper examining more than 66'000 U.S. brokerage households between 1991 and 1996, well before smartphones existed. The households that traded most actively earned an average annual return of 11.4%, while simply holding the market over the same period would have returned 17.9%. The investors doing the most were also the ones losing the most, not despite their effort, but because of it.
What changed between 1996 and 2022 wasn't the underlying behavior. It was the ease of acting on it. A brokerage call has been replaced by a push notification, and a monthly statement has been replaced by a live price ticking on a lock screen. The mechanism, though, is the same: checking and trading most doesn't reflect skill or insight. It reflects reacting to information that rarely warrants a reaction, and paying for it in fees, bad timing, and second-guessing plans that were sound to begin with.
Matching the Rank to the Situation
What you check matters as much as how often. A raw price move only tells you that something changed; it says nothing about whether the change is meaningful. The right response depends on which direction the stock moved, and the Obermatt ranks are built to answer that question directly rather than leave you guessing.
When a stock has risen sharply, the Value Rank and Growth Rank are worth pulling up first. The Value Rank shows whether the rise has pushed the stock into stretched territory relative to its true peers, on measures like price-to-earnings and price-to-book. The Growth Rank shows whether the underlying business, its revenue, profit, and returns, has actually kept pace, or whether the price has simply run ahead of the fundamentals. A high Growth Rank alongside a low Value Rank isn't a red flag on its own; it's common for genuine compounders, and it simply means the market has already priced in a good deal of that growth. It's still useful information before deciding whether to hold, trim, or add.
When a stock has fallen, the Safety Rank and Sentiment Rank matter more. This is the pairing worth remembering: a weak Sentiment Rank alongside strong underlying fundamentals usually means the market is reacting to noise, a rumor, a sector-wide selloff, a single disappointing headline, rather than to anything structurally wrong with the company. A weak Safety Rank alongside a falling price is a different and more serious signal, since it points to leverage, refinancing risk, or liquidity pressure inside the balance sheet itself. Neither rank predicts what happens next. What they do is separate a stock priced for problems it doesn't actually have from one priced for problems it does, a distinction a falling chart can't make on its own.
For a broader check, independent of which direction a stock has moved, the Combined Rank and the 360° View serve that purpose directly: a single, peer-comparable summary of a company's overall quality, useful for confirming that a long-held position still belongs in a portfolio.
None of this replaces judgment. It gives judgment something steadier to work from than a number that moved for reasons you can't always name. That is the entire premise behind the Obermatt Method.
A Personal Observation
I recognized this pattern in myself before I recognized it in the research. For a few summers, a beach afternoon reliably included a phone surfacing every notable move in the stocks I followed, and each alert produced a decision I hadn't asked for. I check my portfolio differently now, and considerably less often. I compare what I see against the rank built for the situation, rather than reacting to a number that moved on its own.
How Often Investors Should Check
Long-term, buy-and-hold investors do fine checking monthly to quarterly, often timed to earnings season. Passive investors, holding mostly index funds with a few individual picks, can go twice a year. Active trading is a different discipline, built around short-term price movement, with a rhythm that has little to do with the kind of investing most subscribers are doing. The rule worth adopting: check about as often as you'd actually act on what you see. A plan to rebalance annually makes daily checking pure noise.
Sometimes, the most disciplined thing an investor can do is nothing at all. The data will still be there when you look again.