Self-confidence and other factors and the effectiveness of investment in the capital market
Journal Title: Zarządzanie i Finanse - Year 2013, Vol 11, Issue 2
Abstract
The purpose of this article was to highlight the psychological behavior of investors for their different characteristics, leading to the formation of stock market losses in investments in the context of self-confidence and prediction errors. The hypothesis that overconfidence exhibited by investors and represented, among others by extensive knowledge, promotes the formation of investment losses in the stock market. The goal has been achieved through a controlled scientific experiment carried out on a group of novice investors, allowing them to explore the self-confidence and assess their response to changing market conditions. A group of 42 students of Faculty of Finance and Accounting III year degree, given the three-way test, which consists in filling in surveys on knowledge of the capital market (rating from 1 to 5), supplemented by questions hominy. Then applied experiment investigating the self-confidence of the respondents, consisting of questions to determine the range of possible occurrence of the correct answer. The last element was involved in the trading game where respondents had to respond in real time to the turning into the capital market condition. For this purpose, have been prepared four securities, three companies of the Warsaw Stock Exchange and Treasury bond. 10 years of trading these securities, have been compressed into six-month periods, so that you could get the effect of long-term participation in the investment process. The aim of the respondents was to maximize the value of the portfolio. The result of this part of the study, there were portfolios of investors and the course of their volatility. In the analyzes, it is concluded that the hypothesis was not confirmed. The results of the rates of return on the portfolio, obtained by investors in the follow-up, are very diverse. Respondents confident in their knowledge of who perform above average, and vice versa. Can not be determined in this area clear trend. Distribution of respondents by sex, are also contends that the analysis made the turn, we give the answers are similar enough that it does not significantly differentiate the significance of the results. In conclusion, it should be noted that in the group of respondents, students of economics, investment performance achieved in a controlled game listed does not depend on gender, knowledge and confidence.
Authors and Affiliations
Radosław Pastusiak
Keywords
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