Barber et al: Trading is Hazardous to Your Wealth
Of 66,465 households with accounts at a largediscount broker during 1991 to 1996, those that trade most earn an annual returnof 11.4 percent, while the market returns 17.9 percent. The average householdearns an annual return of 16.4 percent, tilts its common stock investment towardhigh-beta, small, value stocks, and turns over 75 percent of its portfolio annually.
- Barber and Odean, “The Common Stock Investment Performance of Individual Investors.”
- Individual investors pay massive performance penalty for active trading
- analyzes trading activity for 78,000 households at a large discount brokerage firm starting from Jan 1997