Do the Portfolios of Small InvestorsReflect Positive Feedback Trading?

Abstract

This study examines the stock market forecasts andportfolio allocation decisions of small individualinvestors, based on survey data for 1987–1994. Wheninvestors are bullish, they increase their equityholdings; when investors are bearish, they decreaseequity holdings. The surveyed investors are unableto time the stock market successfully. However, theshifts in their portfolios reflect past marketmovements and are consistent with positive feedbacktrading.