Journal article
Talk and Action: What Individual Investors Say and What They Do
Review of Finance, v 9(4), pp 437-481
2005
Abstract
Combining survey responses and trading records of clients of a German retail broker, this paper examines some of the causes for the apparent failure to buy and hold a well-diversified portfolio. The subjective investor attributes gleaned from the survey help explain the variation in actual portfolio and trading choices. Self-reported risk aversion is the single most important determinant of both portfolio diversification and turnover; other things equal, investors who report being more risk tolerant hold less diversified portfolios and trade more aggressively. Less experienced investors similarly tend to churn poorly diversified portfolios. The effect of perceived knowledge on portfolio choice is less clear cut; holding other attributes constant, investors who think themselves knowledgeable about financial securities indeed hold better diversified portfolios, but those who think themselves more knowledgeable than the average investor churn their portfolios more.
Metrics
18 Record Views
204 citations in Scopus
Details
- Title
- Talk and Action: What Individual Investors Say and What They Do
- Creators
- Daniel Dorn (Corresponding Author) - Drexel University, Bennett S. LeBow College of BusinessGur Huberman - Columbia University
- Publication Details
- Review of Finance, v 9(4), pp 437-481
- Publisher
- Oxford University Press
- Number of pages
- 45
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Scopus ID
- 2-s2.0-28144457500
- Other Identifier
- 991014877713904721