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Terrance Odean - Haas School of Business, University of California, Berkeley. Berkeley, CA, US

Terrance Odean Terrance Odean

Professor | The Rudd Family Foundation Chair | Haas School of Business, University of California, Berkeley

Berkeley, CA, UNITED STATES

Social

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.

Multimedia

Publications:

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Videos:

Making Smart Financial Decisions: Risk and Return

Audio:

Education (3)

UC Berkeley: PhD, Finance

UC Berkeley: MS, Finance

UC Berkeley: BA, Statistics

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 (15)

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.

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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.

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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.

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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.

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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.”

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‘Overconfidence’: Why it’s mostly men under 30 trading bitcoin

MarketWatch  online

2021-02-08

Research co-authored by Prof. Terrance Odean, the Rudd Family Foundation Chair, found that men trade stocks 45% more frequently than women, a symptom of overconfidence. In 2001, when the study was done, these findings manifested in lower investment returns for men due to brokerage trading fees. In 2021, it may be extended to men getting involved in dangerously speculative rallies, the writer argues.

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Bored Lockdown Traders Are a Danger to Themselves

Bloomberg  online

2021-02-04

Constantly checking your portfolio is likely to be bad for your long-term returns as well as your short-term mental health. Research co-authored by Prof. Terrance Odean, the Rudd Family Foundation Chair, found that the most patient investors outperformed the most active buyers-and-sellers by 7 percentage points per year.

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UC Berkeley professors, community react to Gamestop stock prices

The Daily Californian  online

2021-02-02

Prof. Terrance Odean, the Rudd Family Foundation Chair, said one unique detail about the recent GameStop furor is the degree to which nonprofessional investors used premeditated collective action to push share prices up.

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How Does the GameStop Squeeze End?

Gizmodo  online

2021-01-29

Prof. Terrance Odean, the Rudd Family Foundation Chair, said GameStop's stock price will likely drop significantly. "However, there is no hard fast rule about how fast the drop comes," he said. "A stock can stay overpriced relative to fundamentals for a long time. Most likely that will leave owners disappointed in future gains, but that can take quite a while. GameStop is unusual because of how much investor attention it has on both sides."

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Democratising finance

World Finance  online

2021-01-25

Investment platforms like Robinhood are making it easier for ordinary people to invest. But their mission has left many novice traders navigating complex markets without sufficient protection, argues this writer, who cites a 2000 paper entitled "Trading is hazardous to your wealth," by Prof. Terrance Odean, the Rudd Family Foundation Chair.

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Trading Stocks Has Never Been Easier. Here’s How Often Experts Say You Should Buy and Sell

Money  online

2021-01-12

Even as trading behavior changes with technology and generational habits, how often is "too often" to trade will vary depending on an individual's risk tolerance and net worth. Research by Prof. Terrance Odean, the Rudd Family Foundation Chair, found that those who traded the most underperformed the market by a whopping 6.5 percentage points every year.

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Why men are more likely to invest in Tesla

MarketWatch  online

2021-01-12

New research has found that male investors are more inclined to pursue momentum strategies, while female investors tend to be more contrarian. Prof. Terrance Odean, the Rudd Family Foundation Chair, said he had not analyzed data in the new study, but speculated that men are more aggressive than women in chasing investment performance. This is consistent with Odean's research, which found that men are far more confident in their trading abilities than women. This leads them to trade much more frequently—and lose more money as a result.

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Herding by ‘Naive’ Robinhood Traders May Be Good Signal to Short

Bloomberg  online

2020-11-13

Traders using the "millennial-friendly" app Robinhood—the first to offer commission-free trading—are more likely to chase popular stocks with extreme performance. The resulting "herding" becomes a drag on those companies' returns and leads to the reversal of nearly 5% over the following month, according to new research by Prof. Terrance Odean, The Rudd Family Foundation Chair. "Robinhood users are more subject to attention biases. The combination of naïve investors and the simplification of information is associated with herding episodes," he writes.

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Rally democratizes ownership of rare collectibles, but investors should solely focused on ROI should avoid

Sportico  online

2020-10-16

A new app called Rally allows people to buy fractional shares in sports memorabilia and other rare collectibles, such as Clint Frank's 1937 Heisman Memorial Trophy. Finance Prof. Terrance Odean, the Rudd Family Foundation Chair, says these aren’t opportunities that non-accredited investors should be pursuing “unless the [individuals] were getting entertainment value from investing in addition to the possibility of a profit or loss, and were spending entirely discretionary funds.”

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Winning or losing, staying in the game is the thing for some investors

Business Day  online

2020-08-24

Prof. Terrance Odean, the Rudd Family Foundation Chair, says individual investors mostly buy stocks that catch their attention, such as stocks with volatile price moves or that have made big headlines. That's because individual investors aren't equipped to deal with the hundreds of options that are available to them daily.

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Working Papers (2)

Retail Trades Positively Predict Returns but are Not Profitable

with Brad Barber and Shengle Lin.

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Leveraging Overconfidence

with Brad M. Barber, Xing Huan, and Jeremy Ko

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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

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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.

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STEM Parents and Women in Finance

Financial Analysts Journal

Renée B Adams, Brad M Barber, Terrance Odean

2018

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Which Risk Factors Matter to Investors? Evidence from Mutual Fund Flows

Review of Financial Studies

Terrance Odean, Brad Barber, Xing Huang

2016

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