What Matters to Individual Investors? Evidence from the Horse’s Mouth

58 Pages Posted: 11 Oct 2019

See all articles by James J. Choi

James J. Choi

Yale School of Management; National Bureau of Economic Research (NBER)

Adriana Robertson

University of Toronto - Faculty of Law

Date Written: September 30, 2019

Abstract

We survey a representative sample of U.S. individuals about how well leading academic theories describe their financial beliefs and decisions. We find substantial support for many factors hypothesized to affect portfolio equity share, particularly background risk, investment horizon, rare disasters, transactional factors, and fixed costs of stock market participation. Individuals tend to believe that past mutual fund performance is a good signal of stock-picking skill, actively managed funds do not suffer from diseconomies of scale, value stocks are safer and do not have higher expected returns, and high-momentum stocks are riskier and do have higher expected returns.

Keywords: portfolio choice, individual investors, mutual funds, survey

JEL Classification: G11, G23, G40, G50

Suggested Citation

Choi, James J. and Robertson, Adriana, What Matters to Individual Investors? Evidence from the Horse’s Mouth (September 30, 2019). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3462048

James J. Choi (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Adriana Robertson

University of Toronto - Faculty of Law ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
Canada

HOME PAGE: http://https://www.law.utoronto.ca/faculty-staff/full-time-faculty/adriana-robertson

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