Areas of Expertise (4)
Influence of Individual Investors on Asset Prices
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.
UC Berkeley: PhD, Finance
UC Berkeley: MS, Finance
UC Berkeley: BA, Statistics
Honors & Awards (12)
James R. Vertin Award
Carleton College Alumni Distinguished Achievement Award
Barclays Global Investors Award for Best Conference Paper at European Finance Association Meetings
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
National Science Foundation Career Grant National Science Foundation Research Grant
Roger F. Murray Prize
From the Institute for Quantitative Research in Page 2 9/16/16 Finance
American Association of Individual Investors
Completed Dissertation Award
Nasdaq Foundation Dissertation Fellowship
University of California Regents Fellowship
Awarded for outstanding undergraduate accomplishment in statistics
Phi Beta Kappa
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
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
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
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
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
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.”
‘Overconfidence’: Why it’s mostly men under 30 trading bitcoin
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.
Bored Lockdown Traders Are a Danger to Themselves
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.
UC Berkeley professors, community react to Gamestop stock prices
The Daily Californian online
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.
How Does the GameStop Squeeze End?
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."
World Finance online
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.
Trading Stocks Has Never Been Easier. Here’s How Often Experts Say You Should Buy and Sell
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.
Why men are more likely to invest in Tesla
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.
Herding by ‘Naive’ Robinhood Traders May Be Good Signal to Short
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.
Rally democratizes ownership of rare collectibles, but investors should solely focused on ROI should avoid
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.”
Winning or losing, staying in the game is the thing for some investors
Business Day online
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.
Selected Papers & Publications (6)
STEM Parents and Women in FinanceFinancial Analysts Journal
Renée B Adams, Brad M Barber, Terrance Odean
Made Poorer by Choice: Worker Outcomes in Social Security vs. Private Retirement AccountsJournal of Banking & Finance
Brad M Barber, Terrance Odean
Which Risk Factors Matter to Investors? Evidence from Mutual Fund FlowsReview of Financial Studies
Terrance Odean, Brad Barber, Xing Huang
Bubbling with Excitement: An ExperimentReview of Finance
Terrance Odean, Eduardo Andrade, Shengle Lin
The Cross-Section of Speculator Skill: Evidence from TaiwanJournal of Financial Markets
Terrance Odean, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu
The Behavior of Individual InvestorsHandbook of Economics of Finance
Terrence Odean and Brad M. Barber