Factors Related to Making Investment Mistakes in a Down Market
Lei, S. & Yao, R. (2015). Factors related to making investment mistakes in a down market. Journal of Personal Finance, 14(2), 34-42.
26 Pages Posted: 3 Mar 2016
Date Written: 2015
Using data from the 2008 FPA-Ameriprise Financial Value of Financial Planning Research Study, this study identifies the factors related to making investment mistakes by moving assets into more of a cash position in a down market while having an adequate level of emergency funds. The results show that investors who are male, Asian, wealthier, overconfident, loss-averse, and reported an understanding of financial risks are more likely to make such investment mistakes during a down market. These findings have important implications for investors, their advisors, and financial planning professionals in general.
Keywords: Behavioral bias, down market, investment behavior, recession
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