The Power of Simplicity

What if I told you that you could predict the success or failure of stocks in the first few weeks after their IPO, knowing nothing about the company other than their name? What if you only knew the ticker symbol? A team of psychologists investigated this question and determined that you can, in fact, predict early stock success on name alone [1]. Specifically, the fluency of a name matters, in a positive way. Companies and ticker symbols that are fluent, or easy to read and pronounce, outperform those that are not. For example, with all else being equal, Sprint, with the simple ticker symbol S, will outperform Pfizer, symbolized by PFE.

The psychological reason: humans prefer simplicity. This same effect has been found in various areas of impression formation and human interaction.

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Read more here:

http://tsongas.com/blog-posts/the-power-of-simplicity/

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