How does investor confidence lead to trading? Linking investor return experiences, confidence, and investment beliefs

The Impact of Exchange Rate and Investor Confidence Uncertainty on Monetary and Economic Uncertainty in Iran

Failure to timely identify the occurrence of various shocks in the foreign exchange market due to the close relationship with the monetary, macroeconomic, and financial uncertainty can lead to crises and imbalances. In this paper, the effect of exchange rate and investor confidence on monetary and economic uncertainty in Iran is investigated, specifying a Multivariate GARCH model and the Grange...

The Portfolio Allocation Effects of Investor Confidence in Managers

I present a model that can transform discounts on closed-end mutual funds into a measure of investor sentiment about the ability of fund managers to beat the market. It is demonstrated that this measure of sentiment varies positively with capital flows into open-end mutual funds, which are actively managed, and negatively with capital flows into index funds, which are passively managed. This is...

Restoring Investor Confidence: Background on Recent Developments in Canada

Chapter 28 Individual Investor Trading

Individual investors trade stocks in a way very different from what mainstream financial economic theory would predict: they generate too much trading volume and yet obtain belowbenchmark performance. This chapter overviews major 'puzzles' of individual investor trading. The extant literature suggests that behavioral biases and psychological explanations are largely responsible for many of the ...

Investor Competence, Trading Frequency, and Home Bias

People are more willing to bet on their own judgments when they feel skillful or knowledgeable (Heath and Tversky, 1991). We investigate whether this ‘competence effect’ influences trading frequency and home bias. We find that investors who feel competent trade more often and have more internationally diversified portfolios. We also find that male investors, and investors with larger portfolios...