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Overconfidence matters, because it can encourage excess trading.
Xu and Chen (2016) empirically revealed that disclosure via microblogs could significantly increase same day excess returns and excess trading volumes for the company's stocks.
The authors reported that their findings did "not necessarily imply that technical analysis can be used to generate excess trading profits".
In addition, the findings of Tumarkin and Whitelaw (2001) demonstrated that information in posts on message boards cannot predict stock returns or excess trading volumes, thereby supporting the efficient market hypothesis.
Following Barber and Odean (2008), we calculate the excess trading volume (ETV) for each stock as the daily ratio of the stock's trading volume that day to its average trading volume in the whole sample period.
Furthermore, rapid trading in and out of buy and hold, long-term mutual funds can lead to excess trading costs and lower the mutual funds' returns, which is not good for mutual fund shareholders.
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So he proposed that excess trade surpluses should be taxed (see article).
The British economy was inefficient and distorted by excess trade union power, mostly exercised in the interests of relatively well-paid public-sector workers.
"The most important thing we achieved is agreement on a framework for curbing excess trade imbalances in the future," Mr. Geithner said.
Because mutual funds are forced to keep more assets in cash to accommodate these excess trades, and along with that comes an increase in trading costs, which funny enough are passed on to all shareholders.
Bergstrom warned that medicines shortages would be exacerbated by "excess parallel trade" that would emerge if Greece returned to the drachma, with rapid depreciation against the euro likely.
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