Individual investors are impulse buyers. The median investor, often drawn to a stock because it’s in the news, spends just six minutes of research before buying that stock, according to a new study by finance professors Toomas Laarits and Jeffrey Wurgler at New York University’s Stern School of Business. And the bulk of that already-short research time is devoted to perusing a price chart of the stock’s recent performance—and often just the current day’s trading session...
The new research shows how far some individuals deviate from the assumption that economists make about investors behaving rationally. While it may not be surprising to learn that many investors act impulsively, the study shows how little time many spend on research before buying a stock and what these investors pay attention to in that short window.
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The professors reached their conclusions by studying a database of what’s known as “clickstream data.” This database contained the complete browser history of a broadly representative group of several hundred individual investors, enabling the researchers to determine the webpages each investor visited, in what order and for how long before making a trade. The professors analyzed more than eight million clicks and 60,000 hours of internet use.
While it’s possible an investor’s information about a stock might have come from sources other than the internet, Wurgler said he thinks this is unlikely, for two reasons. First, because the internet provides free and near-real-time access to almost all relevant stock-picking variables, it is “the obvious venue for stock research for individual investors.”
Second, “if an investor were nevertheless relying heavily on unobserved information, we might not expect a sudden burst of [internet] research on that stock prior to the trade, but it turns out that is often what we observe.”
~ Mark Hulbert, "Guess How Much Time Many Investors Spend on Researching Stock Buys?," The Wall Street Journal, May 3, 2025
