![]() ![]() However, statistics can never give compelling evidence of causal relations such as between perceived risks and a decision-taking process. The survey appeared to be structured as to aim at answers supporting the idea that perceived risks would drive investment decisions. The research surveyed 757 people, part or all of them of the so-called consumer panel of the AFM, at the time a group of about 2000 people who were invited by the AFM to sit on the panel. Recent research by Stefan Zeitbergen of the Radboud University in The Netherlands in collaboration with the Dutch Authority of the Financial Markets (AFM) supposedly revealed that risk perception rather than rational risks drives investment decisions of consumers. How can you push more for your own luck and share more in the success of companies transcending their IPO’s?ĪRE PERCEIVED RATHER THAN RATIONAL RISKS DRIVING INVESTOR DECISIONS OF CONSUMERS? A minimum daily-dollar volume of US $0.1million is assumed for the stocks. 1: Probabilities of success for investors’ stock accounts (green curve) and for adjusted share prices of company stocks relative to their IPO’s (red curve) starting on April 2007, the onset of the credit crisis. By calculating the ratio of screened and unscreened stocks where screening is on adjusted share prices larger than “1”, the weekly probability can be charted as follows:įig. ![]() These latter probabilities can simply be calculated by DigiFundManager with progressing time by realizing that all IPO’s are normalized to “1”. This small probability stands in remarkable contrast with the probability that companies create long-term investor value above their IPO’s. The taste of success can become so addictive that it may lead to your own demise. To win a game where normally the chances of winning are statistically limited to only 5% requires more than just a quick gamble and a sweat out of your losses. Such a chart shows you within the blink of an eye whether you belong to these happy few or to the gray mass. A chart tells you more than a thousand words or numbers. Are people being misled? It is remarkable that a broker usually does not provide a daily or weekly chart of the progressing Net Liquidating Value (NLV) of your trading account. With statistical expectations of investing appearing exceptionally low, this still leaves ample room for the psychological expectations being kept very high by all sorts of advertising activities. Stock investing would be only profitable for the happy few. This 95% would also include account holders of crypto currencies ( Distribution of wealth). This 95% would include professional investors. See VantagePointTrading for a recent referral. Most traders have heard of the statistics that about 95% of all stock-trading accounts lose money. Usually, your broker provides such a list. You better have this list of transactions well-prepared. In addition, the tax authorities can ask for all your transactions in your trading account. Every investor needs to account for these historical values in his annual tax returns. In the end, the fluctuating historical values of your investments determine the expected risks and rewards. WHAT IS THE LIKELIHOOD OF SUCCESS OF STOCK-TRADING ACCOUNTS? ![]()
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