Individual Investor Perceptions, Behavior, and Performance During the Financial Crisis

We study how during the financial crisis individual investor perceptions change, impact trading and risk-taking behavior, and explain performance. Based on monthly survey data and matching brokerage records from April 2008 to March 2009, we find that successful investors had higher return expectations and higher risk aversion. Furthermore, they traded less, took less risk, and had lower buy-sell ratios. Investors who outperformed during the height of the crisis (September–October 2008) also performed better before. Afterward, however, they became less risk averse, were no longer less likely to trade, and no longer outperformed, suggesting that their success made them overconfiden