IU Study Shows Circadian Rhythm May Affect Investment Success

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Study co-authored by researchers at IU and University of Central Florida shows that a person is more likely to make successful investment decisions when making decisions at the most energetic times of the day , according to a UI Press release.

Cristiano Guarana, co-author of the study and assistant professor of management and entrepreneurship at IU, said the time of day can influence an investor’s success.

These decisions are partly controlled by our circadian rhythm, a natural internal clock, said Guarana. He said the pace at which each person runs depends on whether they are a morning lark or a night owl.

The type of person a person is determines when they experience energy spikes and better decision making, Guarana said. He said the study showed people make better investment decisions at their most energetic time of day.

“People can process and search for more information when they have peak energy levels,” Guarana said. “We perform better when there is alignment between our circadian rhythms and the time of day. “

The more knowledge and expertise a person has on topics like investing, the less their performance fluctuates throughout the day, Guarana said.

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Pete Newton, a senior at IU majoring in finance and accounting, said he is a morning person when it comes to researching the investments he wants to make. Newton said during his summer internship at Barclays Bank he was most productive with his early morning and early afternoon research. He said he was less cognitively focused on his decisions made in the last hours of the day.

The time-based factor is not something well known to students and young investors, Newton said. He said the first time he heard about it was while reading Guarana’s study.

“I think it would be beneficial for all the students because it can help them with their personal investment,” Newton said.

Newton said he believes it is important to find the time of day when people are most energetic and focused to complete the analysis and research of his investments, Newton said.

Simeon Ivanov, a senior at IU specializing in finance and business analysis, said he feels he doesn’t always have predictable energy levels.

Experience working with investments and knowing how to conduct research for those decisions also helps determine the success of investments, Ivanov said. He said having a good personal life and being able to cope with the pressures of deadlines are also important.

“It’s important to make these decisions when you’re at your best,” said Ivanov.


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