Buying the same stock -- again: Pride and regret drive investors' decisions

Jun 01, 2011

(PhysOrg.com) -- Haas professor Terrance Odean, who studies behavioral finance, finds that trading patterns involving previously owned stock are driven by a desire to avoid or at least limit anticipated regret.

How likely are you to repurchase a you sold?

Professor Terrance Odean, who studies behavioral finance, found that that trading patterns involving previously owned stock are driven by a desire to avoid or at least limit anticipated regret. In other words, investors are likely to repurchase a stock if the sale boosts of satisfaction.

Odean and co-authors reviewed more than 700,000 stock purchases and found that investors are one-half to two-thirds more likely to 1) repurchase stocks previously sold for a gain rather than stocks they previously sold for a loss, 2) repurchase stocks that have lost rather than gained value following a prior sale, and 3) purchase additional shares of stocks that have lost rather than gained value since being purchased.

Explore further: Marcellus drilling boom may have led to too many hotel rooms

add to favorites email to friend print save as pdf

Related Stories

Study: Some stock repurchase plans just empty promises

Oct 07, 2009

A new study backs longtime speculation on Wall Street that companies sometimes ballyhoo stock repurchase programs they never plan to pursue, hoping to stir a buzz that will mislead investors and pump up sagging ...

Recommended for you

Marcellus drilling boom may have led to too many hotel rooms

Sep 18, 2014

Drilling in Pennsylvania's Marcellus Shale region led to a rapid increase in both the number of hotels and hotel industry jobs, but Penn State researchers report that the faltering occupancy rate may signal that there are ...

Entrepreneurs aren't overconfident gamblers

Sep 17, 2014

Leaving one's job to become an entrepreneur is inarguably risky. But it may not be the fear of risk that makes entrepreneurs more determined to succeed. A new study finds entrepreneurs are also concerned about what they might ...

User comments : 0