Want to reinforce bad investing habits? Yeah, there’s an app for that.

There’s now an iPhone app that feeds stock news and marketplace sentiment instantly, presumably so the user can trade more (capitalize on trends) and protect her/himself from fluctuations in stocks currently owned.  This app, ultimately, is designed to promote the rash behavior that’s been shown to be a consistent long-term loser for most investors – market timing and frequent trading.

A recent survey of 2,000 high net worth individuals from around the world showed that even the wealthy lament that emotional trading affects their decisions; they wish they could be less … well … human.  Now along comes technology that reinforces our human failings and allows us to make poor choices more efficiently.

A MarketWatch article states that, “Barclays has found that emotional trading can cost up to 20 percent in returns over a 10-year period, and showed that those that employed rules over decision making – who had a concrete strategy – had 12 percent more wealth on average.”

Barclays’ survey found that investors make 3 key mistakes:

1) They go with what’s done well lately (e.g. technology in the 90s and real estate in the noughties).

2) They keep too much of their money in ultra-safe, near-zero return assets, and then use a small portion for rather risky investments and strategies.

3) They focus too much on short-term returns, because they feel twice as much pain from a loss as a gain.  This can cause them to jettison investing strategies when the market hiccups.

Reference: An excellent MarketWatch article by Charles Jaffe.