“IQ and Stock Market Trading” by Mark Grinblatt
UCLA Anderson School of Management
Aalto University and CEPR
University of Chicago Booth School of Business
We analyze whether IQ influences trading behavior, combining equity trade data with two decades of scores from an intelligence test administered to nearly every Finnish male of draft age. Controlling for a remarkable variety of factors, we find that high-IQ investors are less subject to the disposition effect, more aggressive about tax-loss trading, and more likely to supply liquidity when stocks experience large price movements.