Whether you’re a safe, conservative investor or a fast-trading stock-swapper, genes may actually play a role in some of your decisions, according to new research from business professors Stephan Siegel and Henrik Cronqvist .
Individuals frequently exhibit investment biases, such as not diversifying enough, being reluctant to sell stocks that have lost money or simply trading too much. Research from Siegel and Cronqvist shows some investors may be born with those biases.
The pair analyzed data on fraternal and identical twins, and found that identical twins (those with the same genes) are more likely to exhibit the same investment biases than fraternal twins. Swedish financial institutions kept detailed information on citizens’ investments in stocks, bonds and mutual funds for tax purposes for many years, and the records from 1999 to 2007 were used for this study on more than 30,000 twins.
Siegel is a professor at the University of Washington, Michael G. Foster School of Business; and Cronqvist is a professor at Claremont McKenna College, Robert Day School of Economics and Finance.
“We find that a long list of investment biases,