1. Barber, B. M., Odean, T. & Zhu, N. (2007). Do Retail Trades Move Markets?
2. Kumar, A. & Lee, C. M. (2006). Retail Investor Sentiment and Return Co-movements. The Journal of Finance, Vol LXI, no. 5, pp 2451 – 2486

1. Summarize(2 attached papers) - 1 page
2. How to deal with the data (data methods from attached papers) - 2 page
3. How to identify different type of traders (introduce the frequency they use and the variable they use, which is independent variable or dependent variable) - 1 page
4. How to identify who is buying and selling(how can we use that data into our work) - 1 page
5. Look at the correlations on 2 attached papers and give suggestions - 1 page

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Portfolio management is a broad field in finance and there are several theories which help to determine the value of any asset and determine the time the asset should be purchased or sold. It is said that a good financial asset may not be a good financial investment if it is bought when it is overpriced. While some researchers say that technical analysis cannot be used to project stock returns (Krantz, 2009), proponents of behavioral finance such as Kumar & Lee (2006) and Barber et al (2007) demonstrate the presence of human behavior on investment returns. This report analyzes the papers by these two researcher groups.
Summary of the Papers:
The paper by Kumar & Lee (2006) documents the results of analysis which was conducted to test the validity of systematic trading and its effect on the stock returns. As per the fundamental theory, the value of the stock is dependent on the present value of the stream of future cash flows associated with the stock. As such, the trading patterns should not have any effect on the stock returns (Krantz, 2009). However, Kumar & Lee (2006) had researched that there are noise traders and arbitrageurs in the market and the integrated trading patterns of these groups also influences the prices of the stock and hence the returns. Thus, both fundamental valuation and technical trading charts should be used to make investment decisions.
Similar research was also conducted by Barber et al (2007). They also found that trading patterns of the individual investors influenced the stock prices. It was seen that individual investors tend to make trading decisions collectively and they herd together, unlike institutional investors. The buy-sell imbalance can be used to predict the future returns on the stocks. They had analyzed data over a longer time frame from 1983-2000 and had concluded that over shorter...
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