Abstract

This paper hypothesizes that the greater performance of lottery-type stocks in January is stronger for stocks with greater individual investors’ ownership because individual investors prefer lottery-type stocks in the New Year. We find strong evidence supporting our hypothesis from a large sample of NYSE/AMEX/NASDAQ stocks from 1965 to 2008. Moreover, the greater performance of lottery-type stocks persists up to 6 months beyond January. We also investigate the implication of the ＂other January effect＂ (Cooper, McConnell, & Ovtchinnikov, 2006) on lottery-type stocks. Our results indicate that investors are more confident to invest in lottery-type stocks in years with positive January market return.

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