Study Shows Investors Make Bad Sector Bets
Russell E. Jame, University of Kentucky, and Qing Tong, Singapore Management University – School of Business, studied “industry-wide investment decisions” of retail investors. According to Jame and Tong:
We find that retail investor industry demand is highly correlated and strongly related to past industry returns. Moreover, industries heavily bought by retail investors over the past year significantly underperform industries heavily sold over the subsequent year. Similarly, stocks in industries heavily bought by retail investors underperform stocks in industries heavily sold, even after controlling for firm-level demand. Our results suggests that industry-wide categorization influences the investment decisions of retail investors and has a significant impact on asset prices.
Jame’s and Tong’s 35 page PDF file is available for download at SSRN.
Related Posts
-
Position in SPDR Small Cap Value ETF Increased
The position in the SPDR S&P 600 Small Cap...
- February 7, 2019
-
Jeremy Siegel Sees a Bull Market ContinuationJeremy Siegel predicted a bullish 2019 for stocks on...
- January 10, 2019
-
Ken Fisher is Over the Top Bullish for 2019CNBC interviewed successful money manager Ken Fisher yesterday
- January 3, 2019
-
Is the Retirement Crisis Really a Crisis?PBS Frontline recently presented a documentary called “The Retirement...
- April 25, 2013
-
Alarming Chart of the Stock Markets of 1987 and 2012-2013Several days ago I posted a chart showing the...
- May 22, 2013
-
Gary Shilling’s Favorite Investment: 30 Year Treasuries
Larry Kudlow interviewed Gary Shilling last week. Shilling continues...
- June 23, 2011
