Study: Initial investing success not necessarily good

BY DI STAFF | NOVEMBER 03, 2010 7:30 AM

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A recent study conducted at the University of Iowa showed that investors receive less-impressive returns as they get more experience, according to a university press release.

Experts said that individual investors who get good returns on their first purchases tend to be more aggressive with their following purchases and consequently receive less earnings.

Institutional investors, however, do not see their earnings fluctuate in any specific pattern, the experts said in the press release.

In the press release, experts cited a psychological concept called “naïve reinforcement learning,” which says people frequently fail at something they succeeded at initially because they came away with the wrong methods from that initial success.

— by Cathryn Sloane

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