Stefano Giglio, Matteo Maggiori, Johannes Stroebel, Stephen P. Utkus, 02 August 2019

Though economists have made progress determining how investors form expectations, less is known about how those expectations inform portfolio choices. Until recently, few large-scale surveys contained the data to connect individual investors’ beliefs to their actual behaviour. This column uses data collected from a novel ongoing survey eliciting investors’ expectations about GDP growth and future stock and bond returns. By measuring the extent to which investors’ persistent and heterogeneous beliefs and confidence correspond to their portfolio allocations, the research presented here highlights the potential for survey data to inform macro-finance theories.

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