An interesting article from SFGate.com–“Investing Like Dummies: Cal professor says most of us are playing poorly with our own money“–reports on the peculiar behaviors of the average investor. Here are a few from studies performed by Terrance Odean at UC Berkeley’s Haas School of Business as highlighted in the article:
- “One study Odean did with colleagues found that people are more sensitive to up-front load fees but less sensitive to ongoing fees — meaning people are more likely to avoid funds with front-end fees, even if the ongoing fees could end up costing them more money.”
- “In another study, Odean found that most people hold on to losing stocks and sell winners — except during December, when they’re trying to realize losses for taxes. This is clearly irrational — we simply don’t want to face the loss.”
- “Men, particularly single men, made less money on their stocks than women investors solely because the men were overconfident. Both men and women picked equally so-so stocks, but the women, who were less likely to think they ruled the market, traded 45 percent less, which increased their earnings.”