What Makes Investors Trade?

Grinblatt, Mark; Keloharju, Matti

doi:10.2139/ssrn.228801

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What Makes Investors Trade?

32 Pages Posted: 10 Jul 2000

See all articles by Mark Grinblatt

Mark Grinblatt

University of California, Los Angeles (UCLA) - Finance Area; Yale University - International Center for Finance; National Bureau of Economic Research (NBER)

Matti Keloharju

Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Date Written: February 2000

Abstract

A unique data set allows us to monitor the buys, sells, and holds of individuals and institutions in the Finnish stock market on a daily basis. With this data set, we employ Logit regressions to identify the determinants of buying and selling activity over a two-year period. We find evidence that investors are reluctant to realize losses, that they engage in tax-loss selling activity, and that past returns and historical price patterns, such as being at a monthly high or low, affect trading. There also is modest evidence that life cycle trading plays a role in the pattern of buys and sells.

JEL Classification: G12

Suggested Citation: Suggested Citation

Grinblatt, Mark and Keloharju, Matti, What Makes Investors Trade? (February 2000). Available at SSRN: https://ssrn.com/abstract=228801 or http://dx.doi.org/10.2139/ssrn.228801