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: Luxembourg: a tax haven by any other name? Professor on 'secret' tax deals

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

Consumer sentiment brightens holiday spending

Nov 27, 2014

Consumer confidence posted its fourth consecutive monthly gain in November, rising to its highest level since July 2007, according to the Thomson Reuters/University of Michigan Surveys of Consumers.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.