The Research On The Relevance Of Individual Investors' Stock Purchase Decision And Stock Index Fluctuation

Basically,the change of a stock market index isn't caused by the change of state of economy in a country,but in fact it is directly caused by decisions maker of investors who was investing in the stock market.Every stock market in this world at least has three types of investors including institutional investors,foreign investors and individual investors.According to studies in the past,their results indicated that most of individual investors lose their money in the stock investment and always made wrong decisions.Therefore,the author was in doubt what happen if we made an opposite decision with the most of individual investors and this opposite decision could help us improve the efficiency of stock investment or not.So the purposes of the study were to find the relationship between a change of stock index and the decision of the most of individual investors by building regression equation models,to testify the efficiency of estimation of the models and to measure the profitability of using the models in a real stock market.In this study,the author used the change of accumulated net trading value of individual investors to represent the decisions of the most of individual investors and used the historical data in Thailand stock market over five years to build same period models which are used for finding the relationships and different period models which are used for predicting the change of stock index in the future.A current stock data would be used for calculating error estimation and finding a most suitable model.The most suitable model would be experimented in a real stock market investment by using the current stock data then its rate of return would be compared with the rate of return of Dollar cost averaging technique.The study's results showed that at 95% confidence level the value of t-test,coefficient of correlation and regression coefficient were negative in every model.About the effect of predictor in the different period models,the more expanded data collection time of dependent variable,the more decreased magnitude of regression coefficient would be.The models which used the change of accumulated net trading value of individual investors during 7 days as independent variables to estimate the change of stock index in 7 days and to predict the change of stock index in the next 14 days had low errors when compared to other models.About profitability,using this study's regression model to help an individual investor select buy and sell points delivered lower returns than using a Dollar cost averaging technique but in a sideways market using the study's regression model to select buy and sell points would deliver greater returns than using the Dollar cost averaging technique.Empirically,the relationships between the change of accumulated net trading value of individual investors and the change of stock index were always inverse.In term of trend prediction,the models gave satisfied results.Lastly,using the relationship to help selecting buy and sell point was suitable in a stock market which was being a sideways trend.