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Do individual investors learn from their trading experience

  • Gina Nicolosi
  • Liang Peng

This paper investigates whether individual investors adjust their stock trading according to their stock selection abilities, which can be inferred from their trading history. Fixed-effect panel regressions provide strong evidence that the ability to forecast future stock returns significantly affects investors’ trading activity: investors purchase more actively if they are more likely to have stock selection ability. Furthermore, trading experience – measured by the number of purchases, the number of different stocks purchased, and the variance of purchase dollar amounts – significantly helps improve investors’ portfolio performance. In addition, we find that learning behavior varies across investors, which corroborates the heterogeneity of individual investors

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 532.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:532
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