Are Hungarian investors reluctant to realize their losses? |
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| Institution: | 1. Faculty of Economics, Széchenyi István University, Egyetem tér 1, 9026 Gy?r, Hungary;2. K&H Bank, Lehner Ödön fasor 9, 1072 Budapest, Hungary;3. Department of Finance, Budapest University of Technology and Economics, Magyar tudósok krt. 2, 1117 Budapest, Hungary;1. Accounting and Finance Department, University of Zaragoza, Gran Via 2, 50005 Zaragoza, Spain;2. Department of Finance and Centre for Financial Research (CFR), University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany;1. University of Chicago, 5807 S. Woodlawn Ave., Chicago, IL 60637, USA;2. University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104, USA;3. NBER, USA;4. CEPR, United Kingdom;5. National Bank of Slovakia, Slovakia;1. Department of Banking and Finance, University of Zurich, Switzerland;2. Institute for Management Research, Radboud University, Nijmegen, Switzerland |
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| Abstract: | We examine whether Hungarian investors liquidate their winning investments too early and close their losing positions too late. We analyze 130 university students' trading activity for 2009 and 2010. We investigate the disposition effect by four distinct methodologies: by the realized and non-realized gains and losses; by comparing the length of the holding periods; by analyzing the whole length of open positions and by comparing the performance of the transactions. We discover that Hungarian investors exhibit a disposition effect that worsens their investment performance in general. According to our results, the investors time their sale and purchase orders inaccurately. |
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