Gambling with lottery stocks?

Faculty/Professorship: Finance  
Author(s): Oehler, Andreas  ; Schneider, Julian  
Title of the Journal: Journal of Asset Management
ISSN: 1479-179X, 1470-8272
Publisher Information: Basingstoke : Palgrave Macmillan
Year of publication: 2022
Volume: 23
Issue: 6
Pages: 477-503
Language(s): English
DOI: 10.1057/s41260-022-00268-y
In this article, we assess whether German private investors gamble in the stock market. Other studies that have analyzed private investors’ preferences with regard to lottery-like characteristics have used retail or discount brokerage data. They have shown that stock trading has common entertainment features with traditional gambling. In particular, clients of discount brokers may invest for speculative purposes and thus have disproportional preferences for lottery-like characteristics. In consequence, assessing preferences by solely using a subset of investors—associated brokerage clients—may lead to substantially biased results. We assess this issue by using SHS-base data from Deutsche Bundesbank which captures the aggregate holdings of the German private sector. In line with the research, we fnd that German private investors overinvest in stocks with lottery-like features. Yet, when assessing the economic signifcance of the aggregate overinvestment, the efect is negligible. Further, we do not fnd consistent evidence of skewness that positively afects the aggregate holdings of the private sector. As studies have identifed preferences for skewness as a driving force for retail investors’ stock purchases, our results challenge the preconceived notion of which characteristics actually induce (disproportional) private sector investments.
GND Keywords: Lotterie; Aktienanlage; Privater Anleger; Börse
Keywords: Lottery stocks, Private sector holdings
DDC Classification: 330 Economics  
650 Management & public relations  
RVK Classification: QK 640   
Type: Article
Release Date: 23. September 2022
Project: Open-Access-Publikationskosten 2022 - 2024