Where would we be without alphabetic order in our life? Imagine if airports listed all departures randomly on their flight boards? We might never make it to the gate.

But should you find your investments alphabetically? When you’re presented with a list of available funds, should you prefer the ones that appear toward the top of the list?

This is not a trick question. Of course, the answer is no. It shouldn’t matter one bit where a fund name falls on an alphabetic list. And yet, amazingly, a recent study found that many investors may be unintentionally allowing “alphabeticity bias” to creep into their decisions anyway.

The study, “Alphabeticity Bias in 401(k) Investing,” is slated to be published in a forthcoming issue of The Financial Review. Investment selections in 401(k) retirement plans are often presented in alphabetic order, so the study’s authors took a look at whether plan participants were allowing that order to influence their choices. They found that, indeed, “alphabeticity – the order that fund names appear when listed in alphabetical order – significantly biases participants’ investment allocation decisions.” The longer the list of selections, the more alphabeticity bias appeared.

Why would we do this? The authors proposed the reason is related to another bias they called “satisficing.” When you’re reviewing an alphabetic list of choices, once you’ve found one that suits your purpose, you tend to give less consideration to the rest of the list. “My work here is done,” your brain tells you, and it shuts down … even if there may be an even better selection further on.

You shouldn’t, and we won’t, settle for next-best investments – in your retirement plan or anywhere else. Helping you avoid doing so is one way we encourage you to Take the Long View® when you invest.

We’re not the only ones encouraging investors around the globe to Take the Long View® with their investment strategy. AQR Capital Management’s like-minded perspective is one of the reasons we’ve been known to turn to some of their fund solutions, when appropriate for a client’s goals.

We also appreciate how their podcast series, hosted by Gabe Feghali and Dan Villalon, takes otherwise complex academic insights and translates them into what you need to know to build those insights into your own investing.

We’re particularly fond of their September podcast, “Taking Stock of Stock Myths.”

In this podcast, AQR’s team takes on three types of equity risks – home bias, market-timing and inflation – and busts some of the stock market myths that cause investors to succumb to them.

First, what is “risk” to begin with? We like their working definition, which describes risk as “how likely it is that you end up with a bad outcome over whatever investment horizon you care about.”

See what I mean about keeping it simple but substantive? Here are links to listen to the rest:

• “Taking Stock of Stock Myths” (web browser)
• “Taking Stock of Stock Myths” (iTunes)

When this Wall Street Journal video of Warren Buffett’s reflection on the 2008 Financial Crisis debuted in early September 2018, a decade had passed since the beginning of the last big market crisis.

In light of current market volatility, it’s worth revisiting Buffett’s perspective today. Comparing the American economy to “an economic train moving down the track that has no ending,” he cautions against reacting to the occasional “derailments.”

“People talk about a fog of war,” says Buffett, “but there’s a fog of panic too, and during that panic, you’re getting inaccurate information, you’re hearing rumors. If you wait until you know everything, it’s too late.”

Words of wisdom that made sense in 2008. They still make sense today.