Trading Puzzle

Orhan Erdem, Evren Arik and Serkan Yuksel

BIFEC Book of Abstracts & Proceedings, 2014, vol. 1, issue 2, 66-81

Abstract: Many studies explain the high volume of trade in stock markets with non-rational trades of individuals. They claim high volume of trading seems to exceed the trading and hedging needs of the investors. Here we analyze the weekly aggregated daily trades in Borsa Ýstanbul (formerly Istanbul Stock Exchange) of 20,000 individual investors over two year period from 2011 to 2012. Borsa Ýstanbul has one of highest share turnover ratio worldwide (141.8% as of 2012) which makes it an ideal candidate to explore the effects of large turnover ratios. We examine the return performance of individual investors with respect to various factors such as portfolio size, turnover ratio and also demographic factors: gender and age. The main finding and the contribution of the paper is that, the return of the individual portfolio is positively correlated with the portfolio size. Interestingly, almost 70% of all individual investors cannot beat the market. Investors who have high turnover underperform compared to those who have lower turnover ratios. Male investors trade more and lose more vis-à-vis the female and older investors have higher returns for both genders.

Keywords: Turnover; Overconfidence; Portfolio Size; Stock Returns; Individual Investor (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.bifec.com/docs/default-source/default-d ... -and-proceedings.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bor:bifeca:v:1:y:2014:i:2:p:66-81

Access Statistics for this article

More articles in BIFEC Book of Abstracts & Proceedings from Research and Business Development Department, Borsa Istanbul Contact information at EDIRC.
Bibliographic data for series maintained by Ahmet Palu ().