{"id":1968,"date":"2010-09-15T19:49:39","date_gmt":"2010-09-15T18:49:39","guid":{"rendered":"http:\/\/www.decisionsciencenews.com\/?p=1968"},"modified":"2010-09-18T03:14:20","modified_gmt":"2010-09-18T02:14:20","slug":"small-investors-flee-the-stock-market","status":"publish","type":"post","link":"https:\/\/www.decisionsciencenews.com\/?p=1968","title":{"rendered":"Small investors flee the stock market"},"content":{"rendered":"<p>THE POTENTIAL FOR A BOND BUBBLE<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.decisionsciencenews.com\/wp-content\/uploads\/2010\/09\/inv.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-2009\" title=\"inv\" src=\"http:\/\/www.decisionsciencenews.com\/wp-content\/uploads\/2010\/09\/inv.jpg\" alt=\"\" width=\"438\" height=\"604\" \/><\/a><\/p>\n<p>Small investors have been a lot of fun to watch for quite some time now. In the 1930s, doing the opposite of the small investors (the so-called &#8220;<a href=\"http:\/\/premium.working-money.com\/wm\/display.asp?art=390\">odd lot<\/a>&#8221; crowd because they could not afford to trade in amounts as large as standard units) was a popular contrarian strategy. The basic idea is that the small fries will always be wrong so that one can make money by doing the opposite.<\/p>\n<p>In the 1990s, Barber and Odean excavated a goldmine of a data set of 60,000 individual investor accounts which revealed, among other things, that the more frequently individuals trade, the worse they do (<a href=\"http:\/\/www.gsm.ucdavis.edu\/Investorwelfare\/files\/WhyInvestors.pdf\">see Figure 1<\/a>).<\/p>\n<p>And in today&#8217;s gloomy economy, investors are fleeing the stock market and moving into bonds. Check out this article from the New York Times: <a href=\" http:\/\/www.nytimes.com\/2010\/08\/22\/business\/22invest.html\">In Striking Shift, Small Investors Flee Stock Market<\/a>. Don&#8217;t miss that prodigious spike in the bond inflows at the bottom. Also note the inaccurate language about &#8220;the relative safety of bonds.&#8221; Bonds offer no safety against regret.<\/p>\n<p>Shlomo Benartzi speaks of a bond bubble, and also suspects that people are probably overestimating the best that long-term bonds could do in the best possible scenario (for bonds). More to come on this.<\/p>\n<p>SUGGESTED READING:<\/p>\n<p><a href=\"http:\/\/finance.yahoo.com\/banking-budgeting\/article\/110706\/bond-risks-and-how-to-beat-them\">http:\/\/finance.yahoo.com\/banking-budgeting\/article\/110706\/bond-risks-and-how-to-beat-them<\/a><\/p>\n<p><span style=\"font-size: xx-small;\">Photo credit: www.nytimes.com\/2010\/08\/22\/business\/22invest.html<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>THE POTENTIAL FOR A BOND BUBBLE Small investors have been a lot of fun to watch for quite some time now. In the 1930s, doing the opposite of the small investors (the so-called &#8220;odd lot&#8221; crowd because they could not afford to trade in amounts as large as standard units) was a popular contrarian strategy. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[4,16,2,15],"tags":[],"class_list":["post-1968","post","type-post","status-publish","format-standard","hentry","category-encyclopedia","category-ideas","category-research-news","category-tools"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p4LKj-vK","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/posts\/1968","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1968"}],"version-history":[{"count":11,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/posts\/1968\/revisions"}],"predecessor-version":[{"id":2015,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=\/wp\/v2\/posts\/1968\/revisions\/2015"}],"wp:attachment":[{"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1968"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1968"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.decisionsciencenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1968"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}