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Do individual investors learn from their trading experience

Gina Nicolosi and Liang Peng

No 532, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: This paper investigates whether individual investors adjust their stock trading according to their stock selection abilities, which can be inferred from their trading history. Fixed-effect panel regressions provide strong evidence that the ability to forecast future stock returns significantly affects investors’ trading activity: investors purchase more actively if they are more likely to have stock selection ability. Furthermore, trading experience – measured by the number of purchases, the number of different stocks purchased, and the variance of purchase dollar amounts – significantly helps improve investors’ portfolio performance. In addition, we find that learning behavior varies across investors, which corroborates the heterogeneity of individual investors

Keywords: individual investors; learning; rationality; trading (search for similar items in EconPapers)
JEL-codes: D19 G14 (search for similar items in EconPapers)
Date: 2004-08-11
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http://repec.org/esNASM04/up.25500.1075584220.pdf (application/pdf)

Related works:
Journal Article: Do individual investors learn from their trading experience? (2009) Downloads
Working Paper: Do Individual Investors Learn from Their Trading Experience? (2009) Downloads
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