What Makes Investors Trade?


  • Mark Grinblatt,

  • Matti Keloharju

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    • Mark Grinblatt is from the Anderson School at UCLA, and Matti Keloharju is from the Helsinki School of Economics, Finland. We are grateful to Amit Goyal, Matti Ilmanen, and Markku Kaustia for superb research assistance, to the Academy of Finland, CIBER, the Finnish Cultural Foundation, the Foundation of Economic Education, the UCLA Academic Senate, and the Yrjö Jahnsson Foundation for financial support, and to an anonymous referee, René Stulz, Antonio Bernardo, Michael Brennan, and Jay Ritter as well as seminar participants at the Western Finance Association, the European Finance Association, Arizona State, Copenhagen Business School, DePaul, Federal Reserve Bank of Chicago, Helsinki School of Economics, Norwegian School of Management, Rice University, Stockholm School of Economics, University of Houston, and UCLA for comments. A portion of this research was undertaken at Yale University, whose support we appreciate. We are especially indebted to Henri Bergström, Mirja Lamminpää, Tapio Tolvanen, and Lauri Tommila of the Finnish Central Securities Depositary for providing us with access to the data.


A unique data set allows us to monitor the buys, sells, and holds of individuals and institutions in the Finnish stock market on a daily basis. With this data set, we employ Logit regressions to identify the determinants of buying and selling activity over a two-year period. We find evidence that investors are reluctant to realize losses, that they engage in tax-loss selling activity, and that past returns and historical price patterns, such as being at a monthly high or low, affect trading. There also is modest evidence that life-cycle trading plays a role in the pattern of buys and sells.