Indiana Daily Student

IU study shows circadian rhythm can affect investment success

A study co-authored by researchers at IU and the University of Central Florida shows a person is more likely to make successful investment decisions when they make their decisions around their most physically energetic times of day, according to an IU press release

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

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

The type of person someone is determines when they will experience spikes in energy and better decision-making, Guarana said. He said the study showed people made 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 the day.”

The more knowledge and expertise a person has about topics like investing, the less their performances will fluctuate throughout the day, Guarana said. 

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

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

“I think this would be beneficial for all students to know about since it can help with their personal investing,” Newton said. 

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

Simeon Ivanov, an IU senior majoring in finance and business analytics, said he feels he does not always have predictable levels of energy.

The experience of working with investments and the knowledge of how to complete research for these decisions also helps to determine how successful the investments will be, Ivanov said. He said having a good personal life and being able to meet the pressures of deadlines are also important.

“It is important to make these decisions when you are at your best physically,” Ivanov said.

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