Federal ID: 91-6001537
ISSN: 0022-1090 (Print) | 1756-6916 (Online)
Resolving a Paradox: Retail Trades Positively Predict Returns but Are Not Profitable
Brad M. Barber, Shengle Lin, and Terrance Odean ♦ Retail order imbalance positively predicts returns, but on average retail investor trades lose money. Why? Order imbalance tests equal-weighted stocks, but retail purchases concentrate on attention-grabbing stocks that subsequently underperform. Long–short strategies based…