Disclaimer: This is not financial advice. 

The capital market can be a daunting place for overthinkers. With the amount of information available, there seems to be a limitless number of ways to slice and dice, and ultimately overanalyse data. All that is before considering other complexities such as volatility, the various instruments, underlying technologies, and other forces affecting its movements. This is a long-winded way of saying the potential for analysis paralysis is real, but it doesn’t have to be a reality.  

In finance, as with many other aspects of life, decisiveness is key. Those who are quick to make decisions are usually rewarded. We hear terms such as timing the market, which seems to imply that there exists this magic window of opportunity to maximise our returns (or minimise our losses) and we think “I could never”. Well, you are not alone.  

A 2003 study by the University of Michigan found that 73% of adults in the US aged 25 to 35, and 52% aged 45 to 55 are overthinkers. On top of that, it was found that women have a higher tendency to overthink compared to men¹. To put this into perspective, not only are you not alone, but you are also most likely in the majority. 

Before delving into detail, what is the capital market?  Imagine a market, where there are buyers and sellers. In the capital market, buyers are investors and the sellers are corporations.  

There are many products being “traded” in the capital market. Some are suitable for all investors such as equities and unit trust funds, while others are more suited to sophisticated investors such as bonds, derivatives and wholesale funds.  

At first thought, it would seem that the more options available the better. This however, is not necessarily true. Enter the paralyses: Decision and Analysis. 

Decision paralysis occurs when we are faced with an overwhelming number of options and subsequently, are unable to make a decision.  

Analysis paralysis is similar in the sense that a decision cannot be made. The difference is with analysis paralysis, one gets stuck in a never-ending loop of evaluation, fear of making the wrong decision, and ultimately taking no action.  

Consider the Malaysian unit trust market. As of August 2024, there are 767 registered unit trust funds in Malaysia which are managed by 41 companies². These funds cover a wide variety of asset classes, themes, and geographies among others. While a large number of funds to choose from might seem good, it presents endless ways of slicing and dicing the information available. The very task of narrowing down the funds to a small number of potential investments can provide a wide variety of outcomes depending on what character is prioritised. Herein lies the next problem.  

The rise of big data, machine learning, and artificial intelligence has been both a blessing and a curse for the overthinker. On one hand, these technologies provide access to vast amounts of information and powerful analytical tools, enabling deeper insights and more informed decision-making. Complex patterns that were once difficult to detect can now be identified with ease, offering the potential for better predictions and strategies. In theory, this should empower individuals to make smarter, data-driven choices with confidence. 

However, the curse lies in the overwhelming volume of information and the temptation to endlessly analyse it. For an overthinker, more data often leads to more questions, more scenarios to consider, and an endless loop of “what ifs.” Instead of facilitating decisions, the abundance of information can create analysis paralysis, where the fear of missing a critical insight delays action indefinitely. The sheer complexity of machine learning models and AI predictions may also lead to scepticism or a lack of trust in the outputs, further compounding indecision. 

Ultimately, the key lies in striking a balance—using these tools to enhance decision-making without falling into the trap of overanalysis. Learning to filter out noise, focus on key metrics, and trust in well-designed systems can help overthinkers harness the power of technology without becoming overwhelmed by it. 

In theory, investors are rational individuals making decisions that make sense to others. In reality, behaviours such as loss aversion, herd behaviour and recency bias often become drivers of investment decisions. A current example of herd behaviour and recency bias is the May 2024 meme stock rally that included GameStop and AMC.  

Driven by the return of an influential investor on social media and hopes for a similar outcome to the GameStop rally of 2021, others rallied into the stocks, which led to a rapid rise (and subsequent fall) in trading over a few days.³  

Another example is a study from Columbia Business School found that the more choices people had in their 401(k) plans, the less they invested, even when employers offered matching investments. The same study found a similar trend for mutual funds, in which the more choices an investor had, the more they opted for bonds and cash4. The preference for lower risk investments is in line with the irrational behaviour of investors, which tend to be risk averse.  

The ability to analyse information is invaluable and forms the foundation of sound decision-making. In capital markets and beyond, this capacity for thorough evaluation allows for informed, strategic choices and a better understanding of risks and opportunities. However, issues arise when this valuable skill becomes a hindrance—when overthinking creates self-doubt, delays, or even inaction. Here, the emphasis must shift from seeking perfection to embracing progress.

For an overthinker, focusing on the long term rather than short-term fluctuations can be particularly beneficial. Markets, strategies, and life itself are all in constant motion, making it impossible to predict or control every outcome. Trust in the research, effort, and analysis that went into each decision, and let go of the small concerns that can easily consume one’s focus. Ultimately, no choice will ever be free from some element of risk, but that’s part of the natural cycle—the world keeps turning, and so must we.

By placing confidence in well-informed choices and taking that first step, an overthinker can turn analysis into action. Progress is a journey, often one that demands repeated, small steps forward. And while each step may not be perfect, it contributes to a larger movement toward growth and resilience. So, once the work is done, let the decision unfold, knowing that this momentum toward progress is what truly propels us forward.