What Makes Investors Trade?
Open accessAbstract
A unique data set allows us to monitor the buys, sells, and holds of individuals and institutions in the Finnish stock market on a daily basis. With this data set, we employ Logit regressions to identify the determinants of buying and selling activity over a two‐year period. We find evidence that investors are reluctant to realize losses, that they engage in tax‐loss selling activity, and that past returns and historical price patterns, such as being at a monthly high or low, affect trading. There also is modest evidence that life‐cycle trading plays a role in the pattern of buys and sells.
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Persistent evidence of irrationality has been identified, such as overreaction and the disposition effect.
“However, persistent evidence of irrationality has been identified, such as overreaction (Bondt & Thaler, 1985) and the disposition effect (Dhar & Zhu, 2006; Grinblatt & Keloharju, 2001; Shefrin & Statman, 1985).”
From Bridging the divide in financial market forecasting: machine learners vs. financial economists (2016) · cites this paper as Grinblatt & Keloharju, 2001
Cites
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Do retail trades move markets?
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Predictable behavior, profits, and attention
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Bridging the divide in financial market forecasting: machine learners vs. financial economists
Hsu, M.-W., Lessmann, S., Sung, M.-C., Ma, T., & Johnson, J. E. V. (2016) · Expert Systems with Applications · doi:10.1016/j.eswa.2016.05.033 · Cited by 195 · see citing works
Do Portfolio Distortions Reflect Superior Information or Psychological Biases?
Korniotis, G. M., & Kumar, A. (2013) · Journal of Financial and Quantitative Analysis · doi:10.1017/s0022109012000610 · Cited by 166 · see citing works
Striking Out: Biases and Losses of Retail Option Traders
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- Authors
- Grinblatt, M., & Keloharju, M.
- Affiliations
- University of California, Los Angeles (US)
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2001-04
- Volume
- 56
- Issue
- 2
- Pages
- 589-616
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W3124408024
- Cited by
- 1,298
- References
- 3
- Citations by year
- 2026: 31 · 2025: 50 · 2024: 74 · 2023: 44 · 2022: 43 · 2021: 45 · 2020: 57 · 2019: 62 · 2018: 63 · 2017: 63 · 2016: 59 · 2015: 63 · 2014: 82 · 2013: 53 · 2012: 65
- FWCI
- 42.62
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Keywords
- investor trading behavior, tax-loss selling, loss realization, retail investors, institutional investors, Finnish stock market, past returns
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