If you are the type of investor who is always looking for the next quick money maker to add to your portfolio, chances are you may be causing yourself unnecessary stress - with respect to your pocketbook and your health. On the other hand, if you are they type of investor who carefully picks and chooses investments that are geared to make you money in the long run, chances are good that your wallet and your medicine cabinet are in good shape!

In a recent study of over 66,000 investors over a five year period by business professors Terrance Odean and Brad Barber, it was revealed that the investors who conducted more frequent trading trailed the less active investors by over 5% each year. While this may not seem like much at first glance, if you take a large sum of money and compound it by two percent returns that are 5% apart over a five year period, it can mean hundreds of thousand or even millions of dollars.

The reason that more active traders often underperform is thought to be mainly a result of overconfidence and/or unrealistic beliefs about the current state of affairs in the marketplace. In many cases, overconfident investors will add a company to their existing portfolio just because of some interesting facts or favorable press.  These ‘facts’ can often be deceiving and short lived, so it’s important to wait and gather plenty of information about a potential new investment before making a decision to wager your hard earned cash.