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Stock Market Expectations of Dutch Households

  • Michael D. Hurd
  • Maarten van Rooij
  • Joachim Winter

Despite its importance for the analysis of life-cycle behavior, stock ownership by households is poorly understood. Among other approaches to the investigation of this puzzle, recent research has elicited the expectations of stock market returns by individuals. This paper reports findings from a study that collected data over a two-year period both on stock market expectations (subjective probabilities of gains or losses) and on stock ownership. On average stock market expectations are much more pessimistic about gains than the historical record of actual gains. Expectations are heterogeneous, and they are correlated with stock ownership. Over the two years of our data, stock market prices increased, and expectations of future stock market price changes also increased, lending support to the view that expectations are influenced by recent stock gains or losses.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16464.

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Date of creation: Oct 2010
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Publication status: published as Michael Hurd & Maarten Van Rooij & Joachim Winter, 2011. "Stock market expectations of Dutch households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 416-436, 04.
Handle: RePEc:nbr:nberwo:16464
Note: AG
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