Animal Spirits

…experimental evidence indicates that participation in stock message boards/forums increases a typical investor’s propensity to trade and decreases actual investment performance. Investors may want to factor this effect into their information search and processing practices.

…evidence indicates that investors can capture a large portion of Berkshire Hathaway’s long-term outperformance by mimicking holdings described in the company’s SEC disclosures, because many other large traders do not.

…evidence from price and volume dynamics of stocks associated with CEO interviews on CNBC indicates that the financial media temporarily move stock prices by grabbing the attention of individual investors, especially for first-time interviews of growth stock CEOs.

…evidence from a fairly large recent sample of U.S. stocks indicates that traders may be able to suppress trading friction by systematically executing sales at the open and buys later in the trading day.

How much individual investing is lottery-like, just hoping for a big score with no analysis? In their June 2010 paper entitled “Natural Experiments on Individual Trading: Substitution Effect Between Stock and Lottery”, Xiaohui Gao and Tse-Chun Lin relate individual trading activity to national lottery jackpot size in Taiwan. Using twice-weekly lottery jackpots and contemporaneous Taiwan More…

…evidence from simple tests indicates that the U.S. stock market since 1990 performs better on average around new moons than full moons, and during waxing moons than waning moons. However, the levels of relative outperformance are small compared to market variability, so trading these differences is very risky.

…evidence from laboratory experiments indicates that simulated experience, especially with graphical display of results, instills a more realistic grasp of investment choices than does exposure to numerical statistics.

In the opening paragraphs of his April 2010 article entitled “Traditional vs. Behavioral Finance”, Robert Bloomfield handicaps his subject contest as follows: “The traditional finance researcher sees financial settings populated not by the error-prone and emotional Homo sapiens, but by the awesome Homo economicus. The latter makes perfectly rational decisions, applies unlimited processing power to More…

…The Little Book of Behavioral Investing is a broad survey of behavioral biases and countermeasures as related to financial markets, especially for value investors. The self-awareness espoused may be as important to successful investing as valuation methods.

…evidence indicates that the sign (much more than size of profit/loss) of recent trades influences the future trading behavior of individual investors. This influence is adverse to overall profitability.

…evidence indicates that stock prices react somewhat predictably in direction and magnitude to specific categories of news, but general market conditions may affect the reactions.

…evidence indicates that investors/traders may be able to isolate the most profitable short-term reversal opportunities by ranking discount rate shocks (stock prices and earnings forecasts moving in opposite directions) within industries.

…financial advisors may be able to improve advisee satisfaction by refining the typical approach to risk tolerance measurement and accommodation. The self-advised can apply such refinement to themselves.

…active traders may find value in Trading from Your Gut as a means to benchmark their trading thought processes against those of an experienced and introspective peer.

There are academic papers related to your comments. Two of the most heavily downloaded are…