How Comparing Yourself to Others Can Derail Your Investment Strategy

Scrolling through stock market leaderboards or hearing a colleague brag about their holdings may feel harmless. Yet, a growing body of behavioral research shows that the simple act of comparing yourself to other investors can warp your decision-making. Investors shown a scoreboard of top stock performers tend to pile into riskier positions, increase their trading frequency, and still walk away less satisfied with their own results.

The pattern is not confined to simulated markets, nor does it affect day traders alone. Peer comparison shapes everything from core portfolio holdings to 401(k) contribution rates. The common thread: When we focus on relative performance, our brains shift from long-term wealth building to short-term status-checking, often at a financial cost.

Leaderboards, Likes, and the Lure of Higher Risk

Modern brokerage apps incorporate social comparison and gamification into their interfaces. Robinhood, for example, highlights the day’s most-bought stocks, effectively showing users what “everyone else” is doing. An analysis of millions of trades on an unnamed “social trading platform” found that attention-induced buying not only spikes turnover but also increases the volatility of returns.

Seeing others rush in triggers a fear-of-missing-out (FOMO) loop: Investors chase the same tickers, increase leverage, and crowd into big-name stocks that amplify swings.

Simply displaying a top-10 leaderboard nudged otherwise savvy traders to allocate a greater portion of their simulated portfolio to riskier stocks. When asked about it afterward, those investors rated their satisfaction lower than a control group that never saw peer rankings, even when their raw returns were identical. Studies also show that investors who check their accounts more frequently tend to tolerate less risk and earn less money, focusing more on their losses than their gains. Other studies show that comparing yourself to others has a larger effect on happiness than your actual income.

Social comparison, in short, raises the emotional stakes while reducing perceived success.

Even Retirement Savers Check Each Other

Workplace retirement plans might seem more insulated from day-trading hype, but social cues still seep in. In a large field experiment, researchers told low-saving employees how many of their age-matched coworkers were contributing at least 6% of their pay to their 401(k). Instead of nudging laggards to catch up, the peer statistic decreased their savings rates—evidence that upward comparisons are demotivating.

Peer effects can also influence asset allocation, but in the other direction. Studies that looked at 401(k) plan allocations showed that participants who realize their stock exposure lags that of their coworkers often increase their exposure, while those who are already heavily invested in stocks rarely dial risk back.

The result can often be riskier portfolios that may not align with individual goals, time horizons, or risk tolerance.

The Bottom Line

Social comparison is often unavoidable—especially in the social-media age—but you can take certain steps to reduce its influence. Define investor success as progress toward your own financial goals; automate contributions into well-diversified index funds; and limit exposure to trending “hot” stocks, real-time leaderboards, or boastful forums.

When you trade based on FOMO or try only to beat others in the market, you can end up trailing major indexes, paying more in fees, and enjoying it less. Focusing on your personal benchmark restores the most valuable investing edge of all—peace of mind.