August 29, 2012

Beliefs Drive Investors More than Preferences, Study Finds




If experts thought they knew anything about individual investors, it was this: their emotions lead them to sell winning stocks too soon and hold on to losers too long.

But new research casts doubt on this widely held theory that individual investors’ decisions are driven mainly by their feelings toward losses and gains. In an innovative study, researchers found evidence that individual investors’ decisions are primarily motivated by their beliefs about a stock’s future.