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Performance of individual investors and personal investment objectives

  • Camille Magron

    ()

    (LaRGE Research Center, Université de Strasbourg)

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    This paper investigates the performance of 56’723 individual investors using a large French database between 1999 and 2006. In accordance with previous studies, investors in our sample exhibit poor performances and the securities bought are less profitable than the securities sold on the whole period dataset. Taking into consideration the considerable heterogeneity across investors, we show how personal investment objectives, defined by direct proxies, impact portfolio performance. Controlling for diversification, turnover and usual risk factors, investors who have high aspirations underperform their peers whereas those who have low ones outperform their peers.

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    File URL: http://ifs.u-strasbg.fr/large/publications/2012/2012-07.pdf
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    Paper provided by Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg in its series Working Papers of LaRGE Research Center with number 2012-07.

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    Date of creation: 2012
    Date of revision:
    Handle: RePEc:lar:wpaper:2012-07
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    1. Terrance Odean, 1999. "Do Investors Trade Too Much?," American Economic Review, American Economic Association, vol. 89(5), pages 1279-1298, December.
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    16. Soeren Hvidkjaer, 2008. "Small Trades and the Cross-Section of Stock Returns," Review of Financial Studies, Society for Financial Studies, vol. 21(3), pages 1123-1151, May.
    17. Mark Grinblatt & Matti Keloharju & Juhani Linnainmaa, 2011. "IQ and Stock Market Participation," Journal of Finance, American Finance Association, vol. 66(6), pages 2121-2164, December.
    18. Kelly, Morgan, 1995. "All their eggs in one basket: Portfolio diversification of US households," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 87-96, June.
    19. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, 04.
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