Investing in What You Know: The Case of Individual Investors and Local Stocks
Mark S. Seasholes and Ning Zhu This paper tests the performance of individuals’ equity investments. We study over 40,000 accounts and 950,000 trades from a large discount broker. Individuals invest heavily in local stocks and put 14% more into these stocks than a market-neutral portfolio would suggest. Using holdings-based calendar-time portfolios, we find the local
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