Trading is hazardous to your wealth: The common stock investment performance of individual investors

Trading is hazardous to your wealth: The common stock investment performance of individual investors (2000)

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by Brad M. Barber , Terrance Odean , Bing Liang , John Nofsinger , Srinivasan Rangan , Mark Rubinstein , René Stulz ~the

Venue:	Journal of Finance
Citations:	122 - 16 self

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Datum	Value	Source
TITLE	Trading is hazardous to your wealth: The common stock investment performance of individual investors	INFERENCE
AUTHOR NAME	Brad M. Barber	SVM HeaderParse 0.2
AUTHOR AFFIL	* Graduate School of Management, University of California, Davis. We are grateful to the	SVM HeaderParse 0.2
AUTHOR NAME	Terrance Odean	SVM HeaderParse 0.2
AUTHOR AFFIL	* Graduate School of Management, University of California, Davis. We are grateful to the	SVM HeaderParse 0.2
AUTHOR NAME	Bing Liang	SVM HeaderParse 0.2
AUTHOR NAME	John Nofsinger	SVM HeaderParse 0.2
AUTHOR NAME	Srinivasan Rangan	SVM HeaderParse 0.2
AUTHOR NAME	Mark Rubinstein	SVM HeaderParse 0.2
AUTHOR NAME	René Stulz ~the	SVM HeaderParse 0.2
ABSTRACT	Individual investors who hold common stocks directly pay a tremendous performance penalty for active trading. Of 66,465 households with accounts at a large discount broker during 1991 to 1996, those that trade most earn an annual return of 11.4 percent, while the market returns 17.9 percent. The average household earns an annual return of 16.4 percent, tilts its common stock investment toward high-beta, small, value stocks, and turns over 75 percent of its portfolio annually. Overconfidence can explain high trading levels and the resulting poor performance of individual investors. Our central message is that trading is hazardous to your wealth. The investor’s chief problem—and even his worst enemy—is likely to be himself. Benjamin Graham In 1996, approximately 47 percent of equity investments in the United States were held directly by households, 23 percent by pension funds, and 14 percent by mutual funds ~Securities Industry Fact Book, 1997!. Financial economists have extensively analyzed the return performance of equities managed by mutual funds. There is also a fair amount of research on the performance of equities managed by pension funds. Unfortunately, there is little research on the return performance of equities held directly by households, despite their large ownership of equities.	SVM HeaderParse 0.2
YEAR	2000	INFERENCE
VENUE	Journal of Finance	INFERENCE
VENUE TYPE	JOURNAL	INFERENCE
PAGES	773--806	INFERENCE
VOLUME	55	INFERENCE
CITATIONS	32 found	ParsCit 1.0