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- Title
THE CONTESTED SIGNIFICANCE OF FINANCIAL EXPERTISE IN PREDICTING SHORT- AND LONG-TERM RISK AND RETURN ON THE STOCK MARKET.
- Authors
Jansson, Magnus
- Abstract
This study investigates whether the influence of financial expertise on stock investors' ability to predict risk and return is contingent on the length of the forecast horizon. In a quasi-experimental design, stock market professionals (N1 = 63, N2 = 36), private shareholders (N1 = 155, N2 = 172), and students (N1 = 124, N2 = 90) twice provided their short- (3-month) and long-term (2-year) risk and return predictions on stock indices. The results show that in general, experts did not outperform students or private shareholders in their return predictions. However, the level of financial expertise positively influenced the accuracy of risk predictions. An interaction effect between financial expertise and the length of the forecast horizon suggests that more knowledgeable and experienced investors performed better in the long term compared to the short term than inexperienced investors did.
- Subjects
STOCK exchanges; FORECASTING; EXPERTISE; STOCK price indexes; PREDICTION markets; INVESTOR confidence
- Publication
Journal of Prediction Markets, 2019, Vol 13, Issue 2, p15
- ISSN
1750-6751
- Publication type
Article