Just How Much Do Individual Investors Lose by Trading?
2008; Oxford University Press; Volume: 22; Issue: 2 Linguagem: Inglês
10.1093/rfs/hhn046
ISSN1465-7368
AutoresBrad M. Barber, Yi‐Tsung Lee, Yu‐Jane Liu, Terrance Odean,
Tópico(s)Market Dynamics and Volatility
ResumoIndividual investor trading results in systematic and economically large losses. Using a complete trading history of all investors in Taiwan, we document that the aggregate portfolio of individuals suffers an annual performance penalty of 3.8 percentage points. Individual investor losses are equivalent to 2.2% of Taiwan's gross domestic product or 2.8% of the total personal income. Virtually all individual trading losses can be traced to their aggressive orders. In contrast, institutions enjoy an annual performance boost of 1.5 percentage points, and both the aggressive and passive trades of institutions are profitable. Foreign institutions garner nearly half of institutional profits.
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