Business Magazine

Here’s Why You May Not Be Happy with Your Investments

Posted on the 07 March 2013 by Mdelp


Fast food restaurants are notorious for having dining areas that are painted yellow or red and are filled with bright lights and fast-tempo music. This bombardment of sensory inputs has become commonplace because it creates a hectic environment that’s been proven to encourage diners to eat faster and not linger at their tables. In essence: get them in, get them out, repeat.

In the restaurant industry this is called turnover and in the financial industry it’s called churning.

Researches Brian Wansink from Cornell University and Koert Van Ittersum from Georgia Institute of Technology wondered what would happen if a fast food restaurant was given a fine-dining makeover. To find the answer they transformed the dining area of a Champaign Illinois Hardee’s from the typically fast food environment (i.e. bright lights and loud music) to a typical fine-dining environment (i.e. soft lighting and mellow music) and unobtrusively tracked, both before and after the dining room change, the amount time customers spent eating and the amount of food they consumed and asked participants to rate the quality of the food before leaving.

The resulting data showed customers eating in the new fine-dining area (soft lighting and mellow music) ate less food and took a longer time eating their food than those who ate under the old fast food environment (bright lights and loud music).

More importantly, however, customers who ate in the fine-dining environment rated their food as more enjoyable!

Wall Street is very similar to the fast food industry in that they use bright lights and loud noise to encourage customers to “eat” more (10 stocks you must own today!) and “eat” faster (Buy! Sell! Buy! Sell!).

I, for one, started taking a lesson from the fine-dining industry and turned down the lights and noise concerning my investments and, like the results from the above experiment, the lower the sensory input was (i.e. lights and music) the greater my satisfaction was with my investments (i.e. meal).

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