Social-networking sites like Facebook, MySpace, and Twitter as well as thousands of blogs, have only increased the temptation factor, and has made the financial-information bias contagious!

The famous Asch Experiment “tries to show how perfectly normal human beings can be pressured into unusual behavior by authority figures, or by the consensus of opinion around them.”

In their book, Sway: The Irresistible Pull of Irrational Behavior, authors Ori Brafman and Rom Brafman say “regardless of how independent-minded and steadfast we may think we are, we are all tempted at times to align ourselves with a group. We may worry that if we voice an unpopular viewpoint others will doubt our intelligence, taste or competence”

Investors are swayed into frequent trading by this extreme connection to information and to others. Trading has become just another aspect of being accepted into a larger network; yet another way to keep up with the Joneses (or should I say, the Kardashians).

However, it’s important to note that in a stunning variation of this experiment, the Brafmans note that “although the sway of group conformity is incredibly strong, it depends on unanimity for its power.” If a dissenting voice (that of reason?) is introduced, the influence of peer pressure is markedly reduced.

That might explain why generally, investment clubs have a lower turnover and greater success in following a buy-and-hold strategy. In that respect, Minyanville’s exchange is a great way to voice that dissent.

3. The world's accelerating rate of change has created the perception of increased risk in buy-and-hold strategy.

Consider the following statistics:
 

• It took radio broadcasters 38 years to reach an audience of 50 million, television 13 years, and the Internet just 4.
  
  
• In 1998, there were an estimated 143 million Internet users, growing to 1.6 billion today.
  
  
• The cell phone was barely visible as a mass-market product 15 years ago, and now the total mobile phone subscribers are approaching 4 billion!
  
  
• There were 50 pages on the web in 1993. Today, Google has indexed 1 trillion unique URLs!

Innovation is driving forward at an ever-increasing pace (the recent Business Week cover-story titled "Innovation Interrupted," notwithstanding). New businesses are getting created, even as legacy companies struggle to adapt to the changing paradigm. No business is safe: Even companies that had been historically viewed as stable are seeing their business models turned upside down. Netflix (NFLX) is making Blockbuster (BBI) irrelevant, Google (GOOG), Craigslist, and the Internet are pushing newspapers into extinction, and Amazon (AMZN) is giving traditional retailers a permanent headache.