NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Kyle Mangum

Department of Economics
Andrew Young School of Public Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992

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NBER Working Papers and Publications

March 2016Speculative Fever: Investor Contagion in the Housing Bubble
with Patrick Bayer, James W. Roberts: w22065
Historical anecdotes of new investors being drawn into a booming asset market, only to suffer when the market turns, abound. While the role of investor contagion in asset bubbles has been explored extensively in the theoretical literature, causal empirical evidence on the topic is virtually non-existent. This paper studies the recent boom and bust in the U.S. housing market, establishing that many novice investors entered the market as a direct result of observing investing activity of multiple forms in their own neighborhoods and that these “infected” investors performed poorly relative to other investors along several dimensions.
February 2011Speculators and Middlemen: The Strategy and Performance of Investors in the Housing Market
with Patrick Bayer, Christopher Geissler, James W. Roberts: w16784
Housing market transactions are a matter of public record and thus provide a rare opportunity to analyze the behavior, performance, and strategies of individual investors. Using data for all housing transactions in the Los Angeles area from 1988-2009, this paper provides empirical evidence on investor behavior that is consistent with several rationales for speculative investment in the finance literature, including the roles of middlemen and naïve speculators. Speculative activity by novice investors increased sharply in the recent housing boom. These investors earned little more than the market rate of appreciation and demonstrated no ability to foresee market price movements.
 
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