66465 households. One broker.
Six years of every trade.
Barber and Odean tracked them all from 1991 to 1996, then sorted households by how much they traded.
|
Net return per year |
| The fifth that traded the most | 11.4 pct |
| The average household | 16.4 pct |
| The market itself | 17.9 pct |
The average household turned over 75 pct of its portfolio every year and still trailed the index it could have simply owned. Each round trip pays brokerage, STT and the spread, then overconfidence picks the timing. Run that 6.5 point gap across 20 years on Rs 10L and it is the difference between about Rs 87L and about Rs 2.7 cr. The gap was the trading.