Financial markets are increasingly dominated by faster and cheaper information, faster and cheaper trading, and ever shorter time-horizons. Every morsel of news is instantly blasted across multiple platforms sparking a frenzied trading response. Unfortunately, the frenzied activity, and the stories that drive it, are a very costly distraction for investors. When markets are down, they become fearful and withdraw their cash. To compound the problem, when markets are up, they become greedy and add more cash. This pattern of investor behaviour is so consistent that academics have a name for it: the dumb money effect. The Boston-based consulting firm Dalbar…

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