Wow, if proven true this could change some things!
San finds that individuals outperform institutions when it comes to trading! So much for individuals as noise traders!
A quick peek inside:
* "individuals buy low and sell high, and that they realize superior gains by selling"Interesting!
* "findings suggest that due to holding winners too long institutions mistime the momentum cycles and gain less than individuals."
*"in the late 1990s bubble, [individuals] gain about 2% per month more than institutions by buying"
Cite:
San, Granit, "Who Gains More by Trading - Individuals or Institutions?" (June 2005). http://ssrn.com/abstract=687415
1 comment:
I suppose much here depends upon how reliable is the proxy for individual trading. It is made from subtracting institutional trading and insider trading from total trading. This seems decent. As you say, an interesting result. Inside the paper it also suggests that institutions trade most in the stocks least likely to make returns.
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