Investor-Stock Relationships: Love Story, One-Night Stand, or F* Body?

Abstract

This paper uncovers a market anomaly by classifying stocks based on investor attitudes toward holding periods and purchase/repurchase behavior. We introduce three classifications: Love Story stocks, which investors repeatedly buy and hold for extended periods; One-Night Stand stocks, which are purchased once and never revisited; and F' Buddy stocks, which are traded cyclically with moderate repurchase frequency. Our analysis reveals that Love Story stocks tend to have lower betas, stable P/E ratios, and are often valued or socially responsible stocks, while One-Night Stand stocks exhibit high volatility, extreme P/E ratios, and are often speculative growth stocks. F' Buddy stocks fall in between, attracting opportunistic trading behavior. Beyond stock classification, we introduce a novel investor typology: Romantic Investors, who remain loyal to their stocks even in the face of losses. Our findings show that demographic factors significantly influence investment attachment, with older white males exhibiting the highest level of romantic investing, showing unwavering commitment to their stocks regardless of performance. The key takeaway of this study is that investor sentiment and behavioral biases add an additional dimension to stock price movements and market dynamics. Recognizing these patterns can help investors and portfolio managers refine their asset allocation, risk management, and long-term investment strategies for improved market performance.

* Used here as a metaphor for recurring but non-committal investor behavior, akin to casual, short-term engagements without emotional or strategic attachment.

Keywords: Investor behavior, stock classification, sentimental investing, Love Story stocks, One-Night Stand stocks, F' Buddy stocks, market dynamics, demographic investing bias, portfolio strategy JEL Classification: G11

JEL Classification: G11, G12, G41, D84, D91