Individual Investing

In the June 2005 update of their paper entitled “All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors”, Brad Barber and Terrance Odean examine the behaviors of individuals and institutions regarding attention-grabbing stocks. Using four datasets spanning 1991-1999 and focus on three measures associated with attention grabbing events (news, unusual trading volume and extreme returns), they find that: Keep Reading

In the October 2004 version of their working paper entitled “So What Orders Do Informed Traders Use?”, Ron Kaniel and Hong Liu apply the “probability of informed trading” measure to trading in 144 stocks around the end of 1990 to determine the trading habits of informed traders (those with private information related to asset valuation) regarding the use of market orders versus limit orders. They show that: Keep Reading

It is very easy to: (1) set up an account with an online, discount broker; (2) get margin and option-trading privileges; (3) read about hot stocks and funds on the web; and, (4) start trading. Is this process too easy for the average investor? Keep Reading

Thinking about stock message boards… Keep Reading

In case the market’s got you down… Keep Reading

In his June 2004 paper on “What Are Stock Investors’ Actual Historical Returns”, Ilia Dichev examines stock market capital inflows and outflows to determine how well investors really perform compared to buy-and-hold returns. He concludes that: Keep Reading

Is frequent trading an essential aspect of portfolio outperformance? In their April 2000 paper entitled “Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors”, Brad Barber and Terrance Odean examine the trading behavior and returns of retail investors. Using data for 66,465 households at a large discount brokerage firm during 1991-1996, they find that: Keep Reading

Could we make a bundle day trading? In their May 2004 paper entitled “Do Individual Day Traders Make Money? Evidence from Taiwan”, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu and Terrance Odean assess the success of day traders in the Taiwan stock market. Using detailed individual trading records, they find that: Keep Reading