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  

Shan Lei

West Texas A&M University-Department of Accounting, Economics & Finance

Rui Yao

University of Missouri at Columbia - Department of Personal Finance Planning

Date Written: 2015

Abstract

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

Suggested Citation

Lei, Shan and Yao, Rui, Factors Related to Making Investment Mistakes in a Down Market (2015). Lei, S. & Yao, R. (2015). Factors related to making investment mistakes in a down market. Journal of Personal Finance, 14(2), 34-42.. Available at SSRN: https://ssrn.com/abstract=2740022

Shan Lei (Contact Author)

West Texas A&M University-Department of Accounting, Economics & Finance ( email )

Classroom Center 215 H
Canyon, TX 79016
United States
806-651-2513 (Phone)

HOME PAGE: http://www.wtamu.edu/academics/department-of-accounting-economics-and-finance-shan-lei.aspx

Rui Yao

University of Missouri at Columbia - Department of Personal Finance Planning ( email )

239 Stanley Hall
Columbia, MO 65211-7700
United States
573-882-9343 (Phone)
573-884-8389 (Fax)

HOME PAGE: http://pfp.missouri.edu/faculty_yao.html

Paper statistics

Downloads
40
Abstract Views
188