• DOI:10.1016/J.JFINECO.2007.07.001
Corpus ID: 16090053

Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns

@article{Frazzini2005DumbMM,
  title={Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns},
  author={A. Frazzini and O. Lamont},
  journal={NBER Working Paper Series},
  year={2005}
}

A. Frazzini, O. Lamont

Published 2005

Business

NBER Working Paper Series

We use mutual fund flows as a measure for individual investor sentiment for different stocks, and find that high sentiment predicts low future returns at long horizons. Fund flows are dumb money %uF818 by reallocating across different mutual funds, retail investors reduce their wealth in the long run. This dumb money effect is strongly related to the value effect. High sentiment also is associated high corporate issuance, interpretable as companies increasing the supply of shares in response to… CONTINUE READING

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