Meaningful Returns

I spent part of this past weekend in Mobile, Alabama celebrating my grandmother’s 90th birthday. Now, you must understand something about my grandmother’s house: there are always pound cakes. I have never visited my mom’s mother and not seen a homemade pound cake on the kitchen counter. Never. It’s one of the few things that has never changed in my entire life. The same recipe in the same plastic cake container in the same place on the same counter. And on one hand, this is very good, because I have a lot of Dutch blood from my dad’s side, and nothing is better to me than baked goods. But on the other hand, because the pound cake is always there, I always eat it. Not eating it is something I’ve never even contemplated, much less attempted.

Anyway, I got an email last week from my bank (the bank which was most recently in the news for setting up millions of fake accounts, and, more problematically, setting up real and completely unnecessary accounts for some of its most at-risk customers). Here is a screen shot of part of the email.

So, my bank has an app (the “powerful online platform”) which has four supposed benefits, all of which essentially boil down to this: the pound cake is always there.

Now, is it evil of the bank to create this app and make it available to customers? Of course not. I mean, it’s certainly not evil of my grandmother to have a pound cake always there.

BUT. Just remember that the easier it is to trade, the more you will do it. And the more you do it, the worse off you’ll be. Increased trading introduces increased costs (taxes, fees), increased emotional stress and bias (because you can “track your investments closely with real time quotes,” something that is a terrible idea for most of us), and increased opportunities to buy high and sell low–the so-called “Behavior Gap.” Better to keep the trading to a minimum.

Be careful out there with your apps, folks.