What Makes Investors Trade?

Author(s): MARK GRINBLATT and MATTI KELOHARJU

Abstract: A unique data set allows us to monitor the buys,sells,and of individuals and institutions in the Finnish Stock market on a daily basis. With this data set, we employ Logit regressions to identify the determinants of buying and selling activity over two-year period. We find ecidence that investors are reluctant to realize losses,that they engage in tax-loss selling activity,and that past returns and historiacl price patterns,such as being at a monthly high or low,affect trading.There also is modest evidence that life-cycle trading plays a role in the pattern of buys and sells.

Grinblatt and Karolahju 2001 JF.pdf