The U.S. stock market has surged in the past 18 months, fueled in part by FOMO (a fear of missing out) among investors. While investors can be impulsive when buying stocks, it’s their selling decisions that really trip them up.
Professional investors demonstrate skill when buying stocks, but their selling decisions cause them to underperform benchmarks. That’s the conclusion of a recent working paper, “Selling Fast and Buying Slow,” by four researchers who examined the trading activity of more than 700 professionally managed portfolios. Because of bad selling decisions, portfolio managers forgo 80 basis points in returns each year, on …
