Most investors research stocks for just six minutes before buying, study finds

Study Shows Most Investors Spend Just Six Minutes Researching Stocks Before Buying

Impulsive behavior, limited analysis, and a troubling trend in modern stock investing

A revealing new study from researchers at New York University’s Stern School of Business suggests that the average individual investor devotes just six minutes to researching a stock before making a purchase. Even more striking: most of that time is spent looking at short-term price movements — not company fundamentals or risk metrics.

The study, conducted by finance professors Toomas Laarits and Jeffrey Wurgler, uncovers a troubling disconnect between how people should invest and how many actually do. It suggests that a large segment of retail investors buy stocks based on fleeting attention rather than sound financial analysis.

What the research found: a closer look at investor behavior

Using clickstream data, the researchers tracked the online activity of hundreds of individual investors leading up to stock purchases. The dataset covered over eight million website clicks and 60,000 hours of internet use, providing a detailed picture of what investors examined — and for how long.

Key findings include:

• Median research time: 6 minutes

• Time spent analyzing risk statistics: ~6 seconds (1% of total)

• Time spent on fundamentals (earnings, dividends, etc.): 14%

• Time spent viewing price charts: Majority of time, with 73% of those views covering only one day or less

These patterns point to a significant reliance on surface-level information, particularly short-term price movements, when making investment decisions.

“A minority of investors do rather deep dives before trading a stock,” said Wurgler. “But a much larger pool of investors spends virtually no time at all.”

Why this matters: rational investing vs. attention-driven choices

Classical economic models assume that investors behave rationally, weighing risk, return, and fundamentals before acting. But this study highlights just how far actual behavior diverges from that assumption.

In a rational framework, even basic steps like evaluating a stock's volatility or its role in a diversified portfolio would be standard. Yet most investors, especially those with undiversified holdings, ignore these fundamentals entirely, Wurgler notes.

The research also confirms earlier studies by behavioral finance experts like Terrance Odean from the University of California, Berkeley, who found that stocks bought impulsively underperform those that are sold.

“Investors manage the problem by limiting their search to stocks that recently caught their attention,” Odean explains. “But attention-driven buying patterns do not generate superior returns.”

Why flashy stocks can underperform

Stocks that are in the news — often thanks to recent price surges, corporate headlines, or viral social media — attract more attention and, consequently, more impulsive buying.

But according to Nardin Baker, a longtime quantitative analyst and co-author of foundational research on attention in investing, those stocks often underperform precisely because they’re overbought.

“Stocks with the best returns are often so boring that no one talks about them,” Baker says. “Investors end up paying a premium for exciting stories.”

This “excitement premium” can lead to inflated valuations and disappointing long-term performance. In contrast, companies with strong fundamentals but less attention may offer better value.

Can longer research time improve returns?

The study does not claim that simply spending more time researching will guarantee better returns. Even professional investors struggle to consistently beat the market.

However, experts agree that avoiding impulsive trades and conducting more thoughtful research could significantly improve outcomes for retail investors. A well-rounded investment approach should include:

• Reviewing risk measures like beta and volatility

• Understanding the company’s financial statements

• Evaluating industry trends and long-term growth prospects

• Comparing valuation metrics like P/E and P/B ratios

• Considering portfolio fit and diversification

These steps take more than six minutes — but they also move investors closer to the type of discipline that underpins long-term success.

The bottom line for retail investors

While trading apps and headlines make stock investing more accessible than ever, they also increase the temptation to act quickly and emotionally. The reality, as the study shows, is that most investors are treating stock purchases like impulse buys rather than strategic decisions.

Whether you're an experienced trader or new to the market, this research offers a clear takeaway: Slow down. Dig deeper. And resist the urge to chase the latest trending ticker.

In a market driven by speed and noise, deliberate analysis is more important than ever. For investors willing to take the time, the potential payoff isn’t just better returns — it’s better decision-making.

Stay tuned to The Horizons Times for more insights into how psychology and behavior shape today’s investment strategies.