Abstract
We replicate and extend the methodology of Grinblatt and Keloharju (2000) to find that foreign institutional investors in Finland no longer achieve superior performance. This is despite their persistence in adopting ‘positive-feedback’ trading strategies. We find that individuals and households outperform over most horizons even though they adopt negative-feedback trading strategies. Foreign institutions appear to suffer from incentive and informational disadvantages. We conclude that the informationless strategy of buying past winners and selling past losers can no longer be associated with superior performance. Moreover, it is no longer correct to classify unambiguously household and individual investors as ‘noise traders’.
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