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Investors’ aspirations and portfolio performance

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  • Magron, Camille

Abstract

Based on a large database of individual investors, I analyze the impact of personal financial goals on portfolio performance. I stress the role played by latent investor aspirations as defined in the Behavioral Portfolio Theory framework. I identify two opposite profiles of investors. High-aspirations investors trade more and hold riskier portfolios than the average investor. By contrast, low-aspirations investors are more diversified than the average investor. I find that when controlling for diversification, turnover and usual risk factors, high-aspiration investors underperform their peers, whereas low-aspirations investors outperform them.

Suggested Citation

  • Magron, Camille, 2014. "Investors’ aspirations and portfolio performance," Finance Research Letters, Elsevier, vol. 11(2), pages 153-160.
    • Handle: RePEc:eee:finlet:v:11:y:2014:i:2:p:153-160
    DOI: 10.1016/j.frl.2013.09.001
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    References listed on IDEAS

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    Cited by:

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    2. Ormos, Mihály & Timotity, Dusán, 2016. "Market microstructure during financial crisis: Dynamics of informed and heuristic-driven trading," Finance Research Letters, Elsevier, vol. 19(C), pages 60-66.
    3. Amen Aissi Harzallah & Mouna Boujelbene Abbes, 2020. "The Impact of Financial Crises on the Asset Allocation: Classical Theory Versus Behavioral Theory," Journal of Interdisciplinary Economics, , vol. 32(2), pages 218-236, July.

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    More about this item

    Keywords

    G10; G11; G12; G19; Individual Investors; Portfolio performance; Behavioral Portfolio Theory;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G19 - Financial Economics - - General Financial Markets - - - Other

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