How Overconfidence Hurts Investors

A study of 10,000 discount brokerage accounts from 1987 to 1993 shows
that on average, the stocks investors sold beat the market by 2.89%
after two years and those they bought underperformed it by 0.68%.
Here's how they lost out overall after two years.

Lost value from       -2.89%
stocks sold

Underperformance of   -0.68
stocks bought

Transaction costs     -5.90

Total value lost      -9.47%


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Updated Sept. 18, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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