One of the oldest findings in behavioural economics is that retail investors lose money from trading a lot. They "pay a tremendous performance penalty for active trading" concluded Brad Barber and Terrance Odean, two California-based economists, in a classic study. This is partly because trading is costly in itself, but also because investors sometimes trade not on good information, but upon mere noise which contains no signal about future returns. Some recent research highlights just how common this is.
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