Investors' Obsession with Zero Returns Leads to Profit Declines.
Individual investors tend to see zero returns as a natural benchmark for their trading performance. They trade more when they have positive outcomes and less when they have negative outcomes, regardless of the size of those outcomes. This behavior leads to lower profits from their trades, even before considering transaction costs. The findings suggest that people are more influenced by the presence or absence of a stimulus rather than its size, which can explain why some investors trade excessively due to overconfidence.