If you get speeding tickets, watch out: The chances are good that
you will also engage in possibly dangerous investing behavior, too.
That is the implication of a new study that found that individuals who
receive more speeding tickets tend to churn their portfolios…They found that, other things being equal, an investor’s portfolio
turnover rate rose 11 percent after each additional speeding ticket he
received.
Here is the paper. Here is a longer description of the piece. The researchers do control for many variables, including age; the most likely conclusion is that there is a general propensity for thrill-seeking behind both speeding and trading behavior. Do note this is a study of the Finns.
Addendum: Via Deron Bauman, here is a good article that sadness triggers consumer spending.
the most likely conclusion is that there is a general propensity for thrill-seeking behind both speeding and trading behavior.
Or impatience?
Could it be they were just gambling to urgently raise more money to pay the tickets? Finnish speeding fines are proportional to income; president of Nokia got hit with 6 figures once (http://news.bbc.co.uk/2/hi/europe/1759791.stm)
Meds: how is churning a selfish disregard for others in the markets?
On another note, I’ve acquired a decent number of Citations for Superior Motoring Performance from various state and local (and one federal!) officials. And a couple months ago I sold nearly everything in my portfolio.
Then again, I’d held those stocks since the mid-late 1990s and they had each increased 5-10 fold, and I was (still am) convinced that the previously moribund industry was peaking.
Meds- Speeding does not show disregard for others on the road. That’s a silly nanny-state fallacy you’ve bought into.
Having looked at the paper, I reject the speeding ticket dataset as not meaningful. If Finnish highways and police are anything like American (I am ignorant on this point) there are far too many variables in play for those ticket data to mean anything about sensation seeking.
CP
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