Personality Traits, IQ, Financial Literacy and Portfolio Outcomes

We use responses to a self-report survey and matched trading data to investigate the effects of personality (Big Five traits), IQ and financial literacy on individuals’ stock trading portfolios. Traits have small but significant effects: openness and extraversion are associated with undesirable outcomes whereas conscientiousness is associated beneficially. With portfolio size held constant, financial literacy has little effect. Higher IQ is associated with lower trading activity. We conjecture that these factors predict investment outcomes but their effects are complex, and impactful particularly over longer horizons. Other factors such as customer age, portfolio size and portfolio risk much better predict outcomes