In his book The Money Game, Adam Smith explains how investors, regardless of size, are primarily motivated by the desire to be engaged and informed about their investments.
They seek constant updates and reassurance about their stocks, earnings, and market events. They value the personal connection and interaction with their investment advisors or brokers, often preferring to stay active in the market over guaranteed profits.
This behavior may seem irrational at first glance, but it reflects a deeper need for involvement and participation in the investment world.
Here’s an excerpt from the book:
The list of roles investors play could go on and on, but the Australopithecus jawbone is still missing. Perhaps, as the savants say, the investors are in the market for something else. I have a friend who runs a small clearing-house shop, and this is what he says:
“I don’t care whether they’re big investors or little investors. If they make a little money, they’re happy, if they lose a little money, they’re not too unhappy. What they want to do is to call you up.
They want to say, ‘How’s my stock? Is it up? Is it down? What about the earnings? What about the merger? What’s going on?’
And they want to do this every day, they want a friend, they want someone on the telephone, they want to be a part of what’s going on, and if you gave them a choice between making money, guaranteed, or staying in the game, and if you put it in some acceptable face-saving form, every last one of them would pick staying in the game.
It doesn’t make sense, or the kind of sense you expect, but it makes a nutty kind of sense if you see it for the way it is.”
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