Terrance Odean
Professor | The Rudd Family Foundation Chair | Haas School of Business, University of California, Berkeley
Berkeley, CA, UNITED STATES
Areas of Expertise (4)
Influence of Individual Investors on Asset Prices
Investor Behavior
Behavioral Finance
Investor Welfare
About
Terrance Odean is the Rudd Family Foundation Professor of Finance at the Haas School of Business at the University of California, Berkeley. He is an advisory editor of the Financial Planning Review, a member of the Journal of Investment Consulting editorial advisory board and of the Russell Sage Behavioral Economics Roundtable, and is a Wall Street Journal Expert Panelist. In 2016, he received the James R. Vertin Award from the CFA Institute for research notable for its relevance and enduring value to investment professionals. He has been an editor and an associate editor of the Review of Financial Studies, an associate editor of the Journal of Finance, a co-editor of a special issue of Management Science, an associate editor at the Journal of Behavioral Finance, a director of UC Berkeley’s Experimental Social Science Laboratory, a member of the Russell Investments Academic Advisory Board, a member of the WU Gutmann Center Academic Advisory Board at the Vienna University of Economics and Business, a visiting professor at the University of Stavanger, Norway, chair of the Haas Finance Group, and the Willis H. Booth Professor of Finance and Banking. As an undergraduate at UC Berkeley, Odean studied judgment and decision making with the 2002 Nobel Laureate in Economics, Daniel Kahneman.
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Education (3)
UC Berkeley: PhD, Finance
UC Berkeley: MS, Finance
UC Berkeley: BA, Statistics
Links (4)
Honors & Awards (12)
James R. Vertin Award
CFA Institute
Carleton College Alumni Distinguished Achievement Award
2012
Barclays Global Investors Award for Best Conference Paper at European Finance Association Meetings
Moscow 2005
Barclays Global Investment / Michael Brennan Prize for the Best Paper of the year (2001) in the Review of Financial Studies Graham and Dodd Award of Excellence
2000
National Science Foundation Career Grant National Science Foundation Research Grant
(SES-0111470)
Roger F. Murray Prize
From the Institute for Quantitative Research in Page 2 9/16/16 Finance
American Association of Individual Investors
2007
Completed Dissertation Award
Award
Nasdaq Foundation Dissertation Fellowship
Fellowship
University of California Regents Fellowship
Fellowship
Departmental Citation
Awarded for outstanding undergraduate accomplishment in statistics
Phi Beta Kappa
Honor Society
Selected External Service & Affiliations (3)
- Executive Director, Experimental Social Science Laboratory, UC Berkeley
- Editor, Review of Financial Studies
- Ad Hoc Referee for: The American Economic Review, The Quarterly Journal of Economics, The Journal of Finance, The Review of Financial Studies, The Journal of Financial Economics, The Journal of Financial and Quantitative Analysis, Journal of Financial Markets, The Financial Analyst’s Journal, The Journal of Business, The Accounting Review, Scandinavian Journal of Economics, The Journal of Psychology and Financial Markets, Journal of Economics and Business, Financial Services Review, Economic Letters, Naitonal Science Review, European Finance Review, Economica, North American Journal of Economics and Finance, Journal of Banking and Finance
Positions Held (1)
At Haas since 2001
2008 – present, The Rudd Family Foundation Chair 2006 – 2008, Willis H. Booth Chair in Banking and Finance I 2005 – 2006, Professor, Haas School of Business 2003 – 2005, Associate Professor, Haas School of Business 2001 – 2003, Assistant Professor, Haas School of Business 1997 – 2001, Assistant Professor, Graduate School of Management, UC Davis
Media Appearances (20)
Retail trading
Quartz online
2022-03-25
Whether it’s worth it to use an established brokerage comes down to personal preference. “Some investors are clearly better off because they’re paying less. Other investors get too caught up and become exuberant traders. They may be worse off,” Professor Terrance Odean, the Rudd Family Foundation Chair, said in a 2005 interview. “Psychologists find that when you give people more and more data on which to make predictions, they tend to become more confident in their predictions.”
Are You Following the ’Herd’ of Internet Investing?
Morningstar online
2022-03-18
Professor Terrance Odean, the Rudd Family Foundation Chair, discussed his research on individual investor trading, and the need for investors to be cautious. "If you're speculating, if you are buying a futures contract, or even just speculating on a stock, a reasonable question is who do I think is on the other side of this trade? And in the U.S., most likely, the counterparty, the person on the other side of your trade is going to be a professional trader, probably actually, very likely a computer program owned by a big trading firm that consistently makes money."
It’s a Great Time to Hoard Nickels
The Atlantic online
2022-03-18
Russia supplies more than 20 percent of the world’s high-quality nickel. Last week, during the height of nickelmania, the metal in the coin was worth 16 cents. Melting down those nickels for profit is illegal, but that hasn’t stopped opportunistic investors. “I’ve thought it over and I’ve decided I’m not going to rush down to my bank and take out $1,000 of nickels,” said Professor Terrance Odean, the Rudd Family Foundation Chair. “But of the things people do — I’ve seen a lot crazier.”
Terry Odean: Who's on the Other Side of the Trade?
Morningstar's The Long View online
2022-03-14
In this podcast interview, noted researcher Terrance Odean, the Rudd Family Foundation Chair, discusses investors' trading behavior in the Robinhood era, the role of social media, and gender differences in investing. New investors are probably trading more than they need to, Odean says. “Active trading is not the appropriate way for most people to invest for retirement, for long-term goals,” he said. “It's more, to be quite honest, a form of entertainment. And thus, if you are trading quite actively with money that you can afford to play with, there's no great harm done.”
How to Survive a Market Correction
The Motley Fool online
2022-03-04
Timing the market is nearly impossible, which is one more reason smart investors play the long game. Seminal research by Professor Terrance Odean, the Rudd Family Foundation Chair, found that over-trading makes for worse-performing investments over time.
How Robinhood Investors Robbed Themselves
The Wall Street Journal online
2022-01-21
Following the crowd works—until it doesn’t. Research co-authored by Professor Terrance Odean, the Rudd Family Foundation Chair, tracked 4,884 "herding events" on the trading platform Robinhood. The study found that inexperienced investors are more likely to be influenced by others, because trading is so frictionless on the app, they tend not to rely on critical thinking as much as more seasoned investors. They also trade frequently—about 40 times as much as an average customer of Charles Schwab. This herding behavior helped them at first, and then hurt them.
Meditation may be good for your brain --- but bad for your finances
MarketWatch online
2021-12-20
Researchers tested whether a five-minute daily meditation had financial consequences. Terrance Odean, the Rudd Family Foundation Chair, said he practices Vipassana Meditation for 40 minutes a day and attends a week-long silent retreat about once a year. “So, to me, asking people on Amazon mTurk to listen to a five-minute audio recording isn’t precisely mindfulness,” he said. “Relaxation maybe.”
He Invests, She Invests
Psychology Today online
2021-12-04
A paper co-authored by Prof. Terrance Odean, the Rudd Family Foundation Chair, revealed that men tend to be more overconfident than women in investing. This difference in overconfidence yields two results: men trade more than women, and men's performance is hurt by excessive trading.
10 Best Stocks For Day Trading
Yahoo! Finance online
2021-11-03
Investors who have been baffled by increased market volatility in recent weeks should consider some interesting statistics about day traders before organizing their portfolios around short-term price fluctuations, the author writes. According to research by Prof. Terrance Odean, the Rudd Family Foundation Chair, 40% of all day-traders quit within one month.
Women May Be Better Investors Than Men. Let Me Mansplain Why.
The New York Times online
2021-10-27
Heroes or villains, winners or losers, real or imagined, our iconic investors are very, very male. But that’s a mistake — because it turns out that women are often better at investing, writes this columnist. The author mentions the “classic paper” co-authored by Prof. Terrance Odean, The Rudd Family Foundation Chair, who found that individual investors who traded the most earned an annual return that was 6.5 percentage points worse than the overall performance of the stock market. He also found that male investors did worse on average than women because of their more frequent buying and selling.
Did Robinhood’s Clever Design Make Trading Too Easy?
Bloomberg online
2021-10-08
The Robinhood stock trading application is very popular among the younger investor crowd, in large part due to its design. "Trying to convince investors that trading is simple and easy is not new to Robinhood," says Prof. Terrance Odean, the Rudd Family Foundation Chair. "Robinhood has just been more successful at making it look simple and easy."
The hidden biases influencing your investment decisions
Mint online
2021-10-08
Terrance Odean, Rudd Family Foundation Professor of Finance, is interviewed about the origins of behavioral finance. As an undergraduate student at UC Berkeley, Odean studied under Nobel Laureate Daniel Kahneman, one of the pioneers of the field. Odean went on to become a leading researcher. "I have found that overconfidence, limited attention, recency bias, loss aversion and excitement affect the behavior of investors, particularly individual investors," says Odean.
Suicide prevention offered by Robinhood after investor's death
USA Today online
2021-10-06
Robinhood, an online trading platform for amateur investors, says its new around-the-clock phone support will include suicide prevention specialists. According to Prof. Terrance Odean, the Rudd Family Foundation Chair, there "very likely is a need among Robinhood users for support," as the site is popular among young, first-time investors. He added that those investors may need financial education because Robinhood encourages its customers to invest in options, initial public offerings, and cryptocurrencies. "Those are a lot more complex than simply buying a stock," he said.
Bay Area investor bought a dog with his Dogecoin returns. He’s a reminder that meme stocks aren’t going away
San Francisco Chronicle online
2021-06-24
Trading with an eye toward what’s hot isn’t new. In the late 1990s, as the dot-com bubble neared its peak, “there was a lot of trading and a lot of enthusiasm, and you could say many of the same things were going on,” said Prof. Terrance Odean, the Rudd Family Foundation Chair. “The prices on some stocks spiked tremendously, with no clear rationale for the valuation, and then many of them came crashing down just as fast as they went up.”
How to find a female financial advisor
Benzinga online
2021-06-17
While financial advising has traditionally been a male-dominated field, there are good reasons to hire a female advisor. Research by Prof. Terrance Odean, the Rudd Family Foundation Chair, found that found that women outperformed men as investors by 0.94% per year. Women also tend to prioritize long-term investing gains, which maximizes growth.
Build Your Own Target-Date Fund
The Street online
2021-05-25
Retirement investors can save money on fees and improve performance by building their own target-date fund. “Many retirement accounts have limited—and high fee— offerings,” said Prof. Terrance Odean, the Rudd Family Foundation Chair. “In many such cases, an investor won't have the option of substituting low fee ETFs for high fee target-date funds,” he said.
You Are Not Ready to Start Investing Yet
Medium - Personal Finance Analytics online
2021-05-21
A financial advisor is useful for people who lack basic knowledge about investing and wealth building, but self-education is also important. The site recommends resources, including “How to Save Money: Making Smart Financial Decisions,” an archived course taught by Prof. Terrance Odean, the Rudd Family Foundation Chair.
Long-term vs short-term: Investor mindset matters
Investors' Chronicle online
2021-04-21
Prof. Terrance Odean, the Rudd Family Foundation Chair, found in his research that investors “pay a tremendous performance penalty for active trading.” This means that long-term stock-picking is a completely different job from short-term stock-picking.
The lockdown is leading to new bad habits
Napi.hu (Hungarian) online
2021-02-15
Easy access to trading through new apps can lead traders to take more risks when buying and selling stocks. Research co-authored by Prof. Terrance Odean, the Rudd Family Foundation Chair, found that overtrading leads to losses, while patience pays off.
Disappointed GameStop Traders Should Take These Lessons to the Next Mania
Bloomberg online
2021-02-08
Some investors in GameStop are now lamenting the fact that they got pulled into a “cult mentality” and hung on to the stock for too long. Prof. Terrance Odean ran a classic study in the late 1990s looking at the “disposition effect,” which he described as “the tendency of investors to hold losing investments too long and sell winning investments too soon.” With the exception of December, when people are thinking about the end of the tax year, Odean’s paper found that individual investors “realize their profitable stocks investments at a much higher rate than their unprofitable ones.”
Working Papers (2)
Selected Papers & Publications (4)
Attention Induced Trading and Returns: Evidence from Robinhood Users
Journal of Finance (forthcoming)
Terrance Odean, Brad Barber, Xing Huang, and Christopher Schwarz
2020
Learning, Fast or Slow
Review of Asset Pricing Studies
Terrance Odean, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu, and Ke Zhang
2019 10, 61-93.
STEM Parents and Women in Finance
Financial Analysts Journal
Renée B Adams, Brad M Barber, Terrance Odean
2018
Which Risk Factors Matter to Investors? Evidence from Mutual Fund Flows
Review of Financial Studies
Terrance Odean, Brad Barber, Xing Huang
2016
Social