Influence of investment experience to behavior of individual investors and their decisions made in financial market

Straipsnyje nagrinėjama, kaip investuotojų patirtis yra susijusi su jų elgsena ir kokią įtaką investavimo patirtis gali turėti jų priimamiems investavimo sprendimams. Autorės atliko individualių investuotojų tyrimą Lietuvoje, kuriuo siekė atskleisti skirtingos investavimo patirties investuotojų elgsenos panašumus ir skirtumus bei įvertinti sąryšį tarp investuotojų investavimo patirties ir jų priimamų investavimo sprendimų racionalumo.In the paper the results of the research of Lithuanian individual investors are presented with the purpose to assess if their investment experience could influence their investment behaviour and decision made in Lithuanian financial market. Authors pursue to discover the similarities and differences between behaviour of experienced investors and investors-beginners and to investigate the possible relationship between the investment experience and irrationality of their investment decisions. The purpose of the research is to identify the connection between the Lithuanian individual investors’ experience, their behaviour and decisions made in the financial market. Authors of the paper made an assumption, that individual investors’ experience could influence their behaviour and investment decisions. In order to investigate the current situation on Lithuanian financial market, 2 hypothesis are formulated: with the increase of investment experience, investors’ decisions become more rational; risk aversion is typical for investors with longer investment experience. With the intent to check these hypotheses and evaluate the influence of investors’ experience to their decisions and behaviour, research of Lithuanian individual investors was held by the authors of this paper. In order to collect necessary data, authors constrained closed-end questions anonymous questionnaire, tested it during the pilot research, modified it after the evaluation of data collected during the pilot research in order to make it more understandable and attractive for potential respondents - actively trading individual investors of Lithuania. The final questionnaire was divided into 3 major parts: identification of the respondent as investor; investors’ situation evaluation and behaviour preferences; investors’ personal identification. The questionnaire was distributed among individual investors-subscribers and readers of investment magazine "Invest" (with the help of editing office of the magazine, the questionnaire was placed on their page in Facebook) and between the members of the Lithuanian association of financial analysts by sending them the link to the questionnaire by e-mail. Such approach allowed insuring the confidentiality and collecting the necessary data quickly. 394 completely filled questionnaires were evaluated with the help of Excel. Collected data is representative with 99 % probability and 10 % error. The results of the research showed, that: the most successful investors are the beginners (one third of them earned more than market average); the influence of the financial crises was not notice only by investors with longer experience; during the financial crises the most experience investors didn’t managed to make any profit; not taking into consideration the reasons of overconfidence, the obvious connection between the investment experience and overconfidence influence to investors decisions was noticed: most experienced individual investors are more overconfident in comparison to less experienced investors. This also could influence the volume of risk experienced investors are willing to take: the less experienced investors make more risky decisions; it is possible to conclude that investors’ experience is important and valuable factor, affecting the behaviour and their decisions made in Lithuanian capital market. In conclusion, it is possible to state, that with the growth of investment experience, the decisions of individual investors become more rational and less risky. So, both checked during the research hypotheses could be accepted