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Trading Puzzle, Puzzling Trade

  • Erdem, Orhan
  • Yüksel, Serkan
  • Arık, Evren

We explore the return performance of individual investors with respect to various factors such as portfolio size, turnover ratio and also demographic factors: gender and age. Concerning that Borsa İstanbul has one of highest share turnover ratio worldwide (141.8% as of 2012), it is an ideal candidate to do this analysis. We examine the daily trades in Borsa İstanbul (formerly Istanbul Stock Exchange) of 20,000 individual investors over two year period from 2011 to 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-à-vis the female and older investors have higher returns.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46804.

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Date of creation: 06 Feb 2013
Date of revision: 21 Feb 2013
Handle: RePEc:pra:mprapa:46804
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