Just How Much Do Individual Investors Lose by Trading?

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ID: 299440
2008
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Abstract
Individual investor trading results in systematic and economically large losses. Using a complete trading history of all investors in Taiwan, we document that the aggregate portfolio of individuals suffers an annual performance penalty of 3.8 percentage points. Individual investor losses are equivalent to 2.2% of Taiwan's gross domestic product or 2.8% of the total personal income. Virtually all individual trading losses can be traced to their aggressive orders. In contrast, institutions enjoy an annual performance boost of 1.5 percentage points, and both the aggressive and passive trades of institutions are profitable. Foreign institutions garner nearly half of institutional profits.
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openalex_W3123386791 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Brad M. Barber, Yi‐Tsung Lee, Yu‐Jane Liu, Terrance Odean
Journal review of financial studies
Year 2008
DOI
10.1093/rfs/hhn046
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