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Portfolio Inertia and Stock Market Fluctuations
Author(s) -
BILIAS YANNIS,
GEORGARAKOS DIMITRIS,
HALIASSOS MICHAEL
Publication year - 2010
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2010.00304.x
Subject(s) - portfolio , index (typography) , panel study of income dynamics , stock market , business , population , economics , stock (firearms) , financial economics , labour economics , geography , context (archaeology) , demography , archaeology , sociology , world wide web , computer science
This paper uses population‐wide data from the Panel Study of Income Dynamics and the Survey of Consumer Finances to resolve the conflict between overtrading and inactivity shown in administrative data on brokerage and retirement accounts, respectively. Considerable inertia is found and linked to characteristics (e.g., limited education or resources), but less to index movements: the downswing has encouraged staying out, rather than getting out, of the market. The small minority with brokerage accounts exhibits important differences in trading patterns relative to the population and invests small fractions of wealth in brokerage accounts. Results strengthen the case for default options in retirement accounts and built‐in trading provisions in mutual funds.