Wednesday, August 17, 2022 4:24:25 PM
---
"Selling Winners And Holding Losers - Even The Smartest Investors Get It Wrong
The study of how human instinct impacts on investment decisions is hotly debated and sometimes controversial. But even Ben Graham, the father of value investing, was aware of the potential for investors to err. He famously warned that "the investor's chief problem - and even his worst enemy - is likely to be himself."
One of the best known behavioural trap-doors is to hang onto losing investments for too long and sell winning positions too soon. It's a phenomenon known as the Disposition Effect. For years, researchers have warned that investors can damage returns by cutting winners and riding losers. Often, this warning has been pitched in the direction of relatively unsophisticated retail investors. But new research suggests that the same behavioural flaw exists in some of the market's smartest and best-informed traders - Short Sellers.
It serves as a reminder that the risk of succumbing to selling the wrong positions is something every investor needs to be aware of. So here's a review of how things can go wrong and why smart investors are susceptible too.
"Some of the best research into the consequences of all this was done by [Berkeley Professor] Terrance Odean, who waded through 10,000 accounts held at an American discount broker between 1987 and 1993. He found a clear tendency for investors to sell winning positions over losing positions. Moreover, there was no good reason for it - there was no evidence that these investors were deliberately rebalancing their portfolios. On average, after one year, the losing stock, that was held, fell by 1.0% against the market. While the winning stock, that was sold, actually gained 2.4% above the market."
https://seekingalpha.com/article/3716166-selling-winners-and-holding-losers-even-smartest-investors-get-wrong
Recent BRK.B News
- Intel Loses Pentagon Funding, Shell Plans 20% Business Team Reduction, and Latest News • IH Market News • 03/13/2024 11:02:03 AM
- Expedia Announces 1,500 Job Cuts; Hims & Hers Surges 19.8% Post Financial Results, and More News • IH Market News • 02/27/2024 11:15:07 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/26/2024 06:53:12 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 02/26/2024 11:08:31 AM
- Broadcom in Talks to Sell Computing Unit, Alcoa Acquires Alumina for $2.2 Billion, and Latest News • IH Market News • 02/26/2024 10:55:58 AM
- Uniswap Skyrockets 55% with Incentive Proposal, Avalanche Confronts 4-Hour Shutdown, and More • IH Market News • 02/23/2024 06:26:18 PM
- Nvidia’s Earnings Skyrocket by 769%, BuzzFeed’s Pre-Market Shares Surge by 85%, and Other Highlights • IH Market News • 02/22/2024 11:08:52 AM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:46:01 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:40:04 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:39:50 PM
- Form 13F-HR - Quarterly report filed by institutional managers, Holdings • Edgar (US Regulatory) • 02/14/2024 09:02:18 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/05/2024 10:27:17 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/12/2024 10:08:12 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/10/2024 09:16:32 PM
- Wall Street Highlights: Google Rejects Union Negotiations, Exxon Mobil Announces $2.5 Billion Accounting Write-Down in California • IH Market News • 01/05/2024 11:14:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/19/2023 12:41:33 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/14/2023 11:45:55 PM
- Apple Stocks Reach Record, Adobe Faces Stock Drops, Berkshire Hathaway Increases Stake in OXY, and More • IH Market News • 12/14/2023 10:59:57 AM
- Hasbro Job Cuts, Oracle’s Stock Decline, Google’s Epic Antitrust Loss, and More • IH Market News • 12/12/2023 10:50:47 AM
- Batteries Plus & Duracell Ignite Children's Holiday Spirit With Annual Toys For Tots Partnership • PR Newswire (US) • 12/05/2023 03:07:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/01/2023 02:11:02 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 11/29/2023 09:50:02 PM
- Amazon Unveils Innovative Services, Okta Discloses Data Breach, Textron Plans 2% Global Workforce Reduction, and More • IH Market News • 11/29/2023 11:18:11 AM
- Monday’s Wall Street Highlights: Walmart, Disney, Lloyds Banking, Mitsui Financial, HSBC, and more • IH Market News • 11/27/2023 11:29:25 AM
- Wednesday’s Wall Street Highlights: Nvidia, Broadcom, Berkshire Hathaway, Guess, Virgin Galactic, and more • IH Market News • 11/22/2023 11:49:26 AM
FEATURED Cannabix Technologies Launches New Compact Breath Logix Workplace Series and Prepares for Delivery to South Africa • May 7, 2024 8:51 AM
Moon Equity Holdings, Corp. Announces Acquisition of Wikolo, Inc. • MONI • May 7, 2024 9:48 AM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM