Investor Logins and the Disposition Effect

Abstract

Using data from an online brokerage, we examine the role of investor logins in trading behavior. We find that a new reference point is created when an investor logs in and views their portfolio. We observe this as a disposition effect on returns since last login, in addition to the traditional disposition effect on returns since purchase. Further, these reference points produce a strong interaction such that even a small loss since last login nullifies the positive effect of a gain since purchase. This interaction follows if investors select the higher, more aspirational price as a reference point.

Keywords: reference point, disposition effect, attention, login, investor behavior

JEL Classification: G40, G41, D14