Investment Management by Individual Investors: A Behavioral Approach

The IUP Journal of Behavioral Finance, Vol. VII, Nos. 1 & 2, pp. 7-18, March & June 2010

Posted: 30 Mar 2010

See all articles by Abhijeet Chandra

Abhijeet Chandra

Vinod Gupta School of Management, IIT Kharagpur

Dinesh Sharma

BLS Institute of Technology Management

Date Written: March 25, 2010

Abstract

For small and marginal investors, managing their investments is like managing any enterprise. They apply all their skills, knowledge and expertise in managing their money to get the best from investments. Despite all efforts, some cognitive and psychological factors affect their decisions. This study proposes to identify the major psychological biases that influence the individual investors’ behavior and that, in return, may drive a momentum effect in stock returns. In this study, survey approach has been used to achieve this objective. The study used a structured questionnaire in which potential investors were asked for their reactions to some specific situations. The study was undertaken within the geographical area of Delhi and National Capital Region (NCR). The results revealed some psychological and cognitive peculiarities. It was interesting to find that the individual investors’ behavior is driven by some psychological factors such as conservatism, under confidence, opportunitism, representativeness and informational inferiority complex. The results of the study are helpful in understanding the hidden aspects of individual investors’ behavior.

Suggested Citation

Chandra, Abhijeet and Sharma, Dinesh, Investment Management by Individual Investors: A Behavioral Approach (March 25, 2010). The IUP Journal of Behavioral Finance, Vol. VII, Nos. 1 & 2, pp. 7-18, March & June 2010. Available at SSRN: https://ssrn.com/abstract=1578207

Abhijeet Chandra (Contact Author)

Vinod Gupta School of Management, IIT Kharagpur ( email )

Kharagpur, 721302
India

Dinesh Sharma

BLS Institute of Technology Management ( email )

Bahadurgarh
New Delhi, 124507
India

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