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Are Hungarian investors reluctant to realize their losses?

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  • Ormos, Mihály
  • Joó, István

Abstract

We examine whether Hungarian investors liquidate their winning investments too early and close their losing positions too late. We analyze 130 university students' trading activity for 2009 and 2010. We investigate the disposition effect by four distinct methodologies: by the realized and non-realized gains and losses; by comparing the length of the holding periods; by analyzing the whole length of open positions and by comparing the performance of the transactions. We discover that Hungarian investors exhibit a disposition effect that worsens their investment performance in general. According to our results, the investors time their sale and purchase orders inaccurately.

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  • Ormos, Mihály & Joó, István, 2014. "Are Hungarian investors reluctant to realize their losses?," Economic Modelling, Elsevier, vol. 40(C), pages 52-58.
    • Handle: RePEc:eee:ecmode:v:40:y:2014:i:c:p:52-58
    DOI: 10.1016/j.econmod.2014.03.018
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    Cited by:

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    3. Hincapié-Salazar, Juliana & Agudelo, Diego A., 2020. "Is the disposition effect in bonds as strong as in stocks? Evidence from an emerging market," Global Finance Journal, Elsevier, vol. 46(C).

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