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 August 1, 1999

California authors find people trade too much, should hold stocks

Authors Brad M. Barber and Terrance Odean of the University of California, Davis conclude in the July newsletter from Diversified Asset Management Inc. that household traders are overconfident, trade too much and that men tend to take more risks trading than women.

“Trading is Hazardous to Your Wealth,” the title of the first article, concludes that households under-perform the market, trading costs are high, and the potential for financial damage can be attributed to overconfidence.

The second article, “Do You Trade Too Much?” concludes that yes, on average people trade too much and that you should hold onto your stocks.

Finally, “Boys Will Be Boys,” once again highlights the subject of overconfidence, especially among men. Single men trade 67 percent more than single women and earn 2.3 percent less on an annual risk adjusted basis. Diversified Asset Management’s conclusion: Men are overconfident.

Authors Brad M. Barber and Terrance Odean of the University of California, Davis conclude in the July newsletter from Diversified Asset Management Inc. that household traders are overconfident, trade too much and that men tend to take more risks trading than women.

“Trading is Hazardous to Your Wealth,” the title of the first article, concludes that households under-perform the market, trading costs are high, and the potential for financial damage can be attributed to overconfidence.

The second article, “Do You Trade Too Much?” concludes that yes, on average people trade too…

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