Are you enthusiastic about purchasing stocks? If so, there is a good chance that openness is one of your top character traits.
Openness - which Harvard University defines as "the tendency to be open to new aesthetic, cultural or intellectual experiences" - drives stock market investing more than any other major character trait, according to a new study from the National Bureau of Economic Research.
An individual's personality in general is more important to determining their investment decisions than many other factors, according to researchers at Northwestern University, DePaul University and the London School of Economics.
Personality plays a bigger role in investment decisions than age, education, income, sex and wealth combined, the researchers say.
The researchers looked at what are known as the big five personality traits, which are:
A high degree of openness and low degree of neuroticism is the combination most likely to motivate people to invest in stocks, according to the research.
People who are open tend to think about the possibility of extremes, which keeps them focused on the reality that stocks tend to swing from highs to lows. They also show a relatively high tolerance for risk.
On the other hand, people who have high degrees of neuroticism are less stable emotionally and struggle with anxiety. They are easily panicked, which can make them less tolerant of the roller-coaster ride that comes with investing in stocks.
Overall, people with high degrees of neuroticism tend to be more pessimistic about the stock market and worry that it will crash.
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Some of the personality traits appear to be less relevant to whether or not a person purchases stocks. For example, agreeableness plays no role whatsoever in whether a person buys stocks.
In a commentary on the study, Kimberly Blanton of the Center for Retirement Research at Boston College, notes some important limitations of the research:
"The downside of this study is that 80 percent of the people in it were white men over 60, who typically had more than $1 million in investments. Women, who are more hesitant than men to invest in stocks, should take the results with a grain of salt."
Still, Blanton says the researchers' findings make intuitive sense. She notes that our personalities drive major decisions "about careers, marriage, and spending money. So why not one's views of the stock market?"
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