Note to investors: Stop being so lazy!

lazy alphabet sloth
Lazy like a sloth: A new study shows early alphabet stocks have higher valuations because investors get lazy when researching investment decisions.

Forget bulls and bears. Most investors act more like sloths.

One would think that investors decide which stocks to buy and sell based on rigorous analysis or even just brand awareness.

But a new study released Tuesday concludes something far less sophisticated is behind some investment decisions: where the stocks reside in the alphabet.

A husband-and-wife pair of academics found that stocks like Apple (AAPL), Amazon (AMZN) and Alcoa (AA) that appear early in the alphabet are traded more frequently and have higher valuations than their late alphabet peers like Yelp (YELP) and Zynga (ZNGA).

"Simply said, investors are lazy," said Jesse Itzkowitz, a professor at Yeshiva University's Syms School of Business who co-authored the paper along with Seton Hall University professors Jennifer Itzkowitz and Scott Rothbort.

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Just like phone books, stocks are typically listed alphabetically. That means early alphabet stocks are seen more often by investors.

And there's plenty of research that shows people confronted with making a choice between a large number of options stop searching when an "acceptable" alternative is found -- even if a better one could still be discovered.

"That used to be the strategy for maximizing calls from the phone book. We were incredibly surprised it turns out there is this alphabetical order effect for stocks too," said Itzkowitz.

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Information overload? By analyzing thousands of U.S. stocks traded between 1985 and 2012, they found the market-to-book value of an early alphabet stock is 6.1% higher than later alphabet stocks.

They also discovered that the first 20% of the firms according to alphabetical order account for 21% of stock turnover, or volume.

"That one percentage point doesn't sound like a lot, but we're talking about billions and billions of dollars on a daily basis," said Itzkowitz.

Interestingly, the early alphabet effect only shows up after 1998. That suggests it may be related to information overload brought on by mass adoption of the Internet.

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Random is good: Given their findings, the professors recommend individual investors limit the amount of information they weigh when making investment decisions and re-sort stocks based on various metrics before making any decisions.

They also argue that in the future brokerages and other sources of market data should order stocks randomly or give people more encouragement to pre-screen stocks.

In the meantime, companies considering an initial public offering might want to jump on this unclaimed stock ticker symbol: AAA.

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