Do Individual Investors Learn from Their Trading Experience?
Liang Peng and
Yale School of Management Working Papers from Yale School of Management
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)
Date: 2003-11-01, Revised 2009-09-01
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Journal Article: Do individual investors learn from their trading experience? (2009)
Working Paper: Do individual investors learn from their trading experience (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ysm:somwrk:ysm439
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