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Trading Puzzle, Puzzling Trade

  • Orhan Erdem

    ()

  • Evren Arik

    ()

  • Serkan Yüksel

    ()

We explore the return performance of individual investors with respect to various factors such as portfolio size, turnover and also demographic factors: gender and age. Concerning that Borsa Ýstanbul has one of highest turnovers in the world (141.8% as of 2012), it is an ideal candidate to do this analysis. We examine the daily trades in Borsa Ýstanbul (formerly Ýstanbul Stock Exchange) of 20,000 individual investors over two year period 2011-2012. The main finding which contradicts other studies and the contribution of the paper is that, the return of the individual portfolio is positively correlated with the portfolio size. Other findings are: Almost 70% of all individual investors cannot beat the market. Investors who have high turnover underperform compared to those who have lower turnover. Male investors trade more and lose more vis-a-vis the female and older investors have higher returns.

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Paper provided by Research and Business Development Department, Borsa Istanbul in its series Working Paper with number 05.

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Date of creation: May 2013
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Handle: RePEc:bor:wpaper:1305
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