Investing Rules
In a study of monthly positions for over 66,000 households with accounts at a large discount brokerage, Brad Barber and Terrance Odean found that the 20% of investors who traded least actively outperformed the 20% who traded most actively by an average of 5.5 percentage points a year.
Barber & Odeon found that men - who tend to be more overconfident than women in areas such as finance - traded on average 45% more actively than women. Both men and women tended to reduce their returns through trading, but men did so annually by 1 percentage point more, on average, than did women.
When Odeon studied the common stock trading patterns for investors at a large discount brokerage, he found that they are far more likely to sell their winners than their losers. The losers people clung to subsequently underperformed the winners they sold.