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A list of all the posts and pages found on the site. For you robots out there, there is an XML version available for digesting as well.
Pages
Posts
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Blog Post number 4
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Blog Post number 1
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portfolio
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publications
Learning by Trading
Published in Review of Financial Studies, 2009
Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect, and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some investors become better at trading with experience, while others stop trading after realizing that their ability is poor. A substantial part of overall learning by trading is explained by the second type. By ignoring investor attrition, the existing literature significantly overestimates how quickly investors become better at trading.
Recommended citation: Seru, Amit, Tyler Shumway, and Noah Stoffman. "Learning by trading." The Review of Financial Studies 23, no. 2 (2010): 705-739.
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No Place Like Home: Familiarity in Mutual Fund Manager Portfolio Choice
Published in Review of Financial Studies, 2012
Abstract. We show that familiarity affects the portfolio decisions of mutual fund managers. Controlling for fund location, funds overweight stocks from their managers’ home states by 12% compared with their peers. In team-managed funds, home-state overweighting is 37% larger than the fund location effect. The home-state bias is stronger if the manager is inexperienced, is resource-constrained, or spent more time in his home state. Home-state stocks do not outperform other holdings, confirming that home-state investments are not informed. The overweighting also leads to excessively risky portfolios.
Recommended citation: Pool, Veronika K., Noah Stoffman, and Scott E. Yonker. "No place like home: Familiarity in mutual fund manager portfolio choice." The Review of Financial Studies 25, no. 8 (2012): 2563-2599.
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Who trades with whom? Individuals, institutions, and returns.
Published in Journal of Financial Markets, 2014
Using all trading in Finland over a 15-year period, I study the relation between price changes and the trading of individuals and financial institutions. On average, prices increase when institutions buy from individuals, and decrease when institutions sell to individuals. No such consistent pattern is observed when individuals trade with other individuals, or when institutions trade with other institutions. If prices do move while individuals trade among themselves, they quickly revert. These reversals occur as institutions trade with individuals in a direction that pushes prices toward previous levels.
Recommended citation: Stoffman, Noah. "Who trades with whom? Individuals, institutions, and returns." Journal of Financial Markets 21 (2014): 50-75.
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The People in Your Neighborhood: Social Interactions and Mutual Fund Portfolios
Published in Journal of Finance, 2015
Abstract. We find that socially connected fund managers have more similar holdings and trades. The overlap of funds whose managers reside in the same neighborhood is considerably higher than that of funds whose managers live in the same city but in different neighborhoods. These effects are larger when managers share a similar ethnic background, and are not explained by preferences. Valuable information is transmitted through these peer networks: a long‐short strategy composed of stocks purchased minus sold by neighboring managers delivers positive risk‐adjusted returns. Unlike prior empirical work, our tests disentangle the effects of social interactions from community effects.
Recommended citation: Pool, Veronika K., Noah Stoffman, and Scott E. Yonker. "The people in your neighborhood: Social interactions and mutual fund portfolios." Journal of Finance 70, no. 6 (2015): 2679-2732.
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Technological Innovation, Resource Allocation, and Growth
Published in Quarterly Journal of Economics, 2017
Abstract. We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent-level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations the patent receives in the future. Our new measure is associated with substantial growth, reallocation, and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.
Recommended citation: Kogan, Leonid, Dimitris Papanikolaou, Amit Seru, and Noah Stoffman. "Technological innovation, resource allocation, and growth." Quarterly Journal of Economics 132, no. 2 (2017): 665-712.
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Trust Busting: The Effect of Fraud on Investor Behavior
Published in Review of Financial Studies, 2017
Abstract. We study the importance of trust in the investment advisory industry by exploiting the geographic dispersion of victims of the Madoff Ponzi scheme. Residents of communities that were exposed to the fraud subsequently withdrew assets from investment advisers and increased deposits at banks. Additionally, exposed advisers were more likely to close. Advisers who provided services that can build trust, such as financial planning advice, experienced fewer withdrawals. Our evidence suggests that the trust shock was transmitted through social networks. Taken together, our results show that trust plays a critical role in the financial intermediation industry.
Recommended citation: Gurun, Umit G., Noah Stoffman, and Scott E. Yonker. "Trust busting: The effect of fraud on investor behavior." Review of Financial Studies 31, no. 4 (2018): 1341-1376.
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Do shocks to personal wealth affect risk-taking in delegated portfolios?
Published in Review of Financial Studies, 2019
Abstract. Using exogenous wealth shocks stemming from the collapse of the housing market, we show that managers who experience substantial losses in their home values subsequently reduce risk in their delegated funds. The decline in fund risk comes through reductions in idiosyncratic risk and tracking error, suggesting that the behavior is likely driven by career concerns. Our paper provides evidence that idiosyncratic personal preferences affect mutual fund managers’ professional decisions and offers a methodology for testing for manager effects that is not subject to the selection critique of Fee, Hadlock, and Pierce (2013).
Recommended citation: Pool, Veronika K., Noah Stoffman, Scott E. Yonker, and Hanjiang Zhang. "Do shocks to personal wealth affect risk-taking in delegated portfolios?" Review of Financial Studies 32, no. 4 (2019): 1457-1493.
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Left Behind: Creative Destruction, Inequality, and the Stock Market
Published in Journal of Political Economy, 2020
Abstract. We develop a general equilibrium model of asset prices in which benefits of technological innovation are distributed asymmetrically. Financial market participants do not capture all economic gains from innovation even when they own shares in innovating firms. Such gains accrue partly to the innovators, who cannot sell claims on proceeds from their future ideas. We show how the resulting inequality among agents can give rise to a high risk premium on the aggregate stock market, return comovement and average return differences among firms, and the failure of traditional representative agent asset pricing models to account for cross-sectional differences in risk premia.
Recommended citation: Kogan, Leonid, Dimitris Papanikolaou, and Noah Stoffman. "Left behind: Creative destruction, inequality, and the stock market." Journal of Political Economy 128, no. 3 (2020): 855-906.
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Friends with Bankruptcy Protection Benefits
Published in Journal of Financial Economics, 2021
Abstract. We show information spillovers limit the effectiveness of targeted debt relief programs. We study individuals who learn about the likelihood of debt relief from the recent experiences of workplace peers filing for bankruptcy protection. Peers granted bankruptcy can discharge debts, while peers facing dismissal lose all protections. Exploiting the random assignment of judges to bankruptcy cases, we determine that individuals with a “dismissed peer” are significantly less likely to file for bankruptcy or enter foreclosure. We highlight a novel channel relating social networks to household finances and identify additional costs of granting individual debt relief imposed on lenders.
Recommended citation: Kleiner, Kristoph, Noah Stoffman, and Scott E. Yonker. "Friends with bankruptcy protection benefits." Journal of Financial Economics 139, no. 2 (2021): 578-605.
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Unlocking clients: The importance of relationships in the financial advisory industry
Published in Journal of Financial Economics, 2021
Abstract. We investigate the importance of client relationships in the financial advisory industry. We exploit firm-level variation in adoption of the Broker Protocol, which enabled clients to follow their advisers to member firms without fear of litigation. We show that advisers’ ability to maintain client relationships is a significant predictor of their employment decisions; that about 40% of client assets follow advisers when they move; and that once clients are “unlocked,” firms become less willing to fire advisers for misconduct. Firms that unlock their clients subsequently experience higher levels of misconduct and increase their fees, calling into question whether clients are better off.
Recommended citation: Gurun, Umit G., Noah Stoffman, and Scott E. Yonker. "Unlocking clients: The importance of relationships in the financial advisory industry." Journal of Financial Economics 141, no. 3 (2021): 1218-1243.
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Small innovators: No risk, No return
Published in Journal of Accounting and Economics, 2022
Abstract. We show that small innovators (i.e., small firms with recent patent grants) earn higher future returns than small non-innovators. However, we find no such innovation premium among large firms. The higher returns are driven by risk, not underreaction to announcements of recent patent grants. We find that being small and innovative interacts with financial constraints to explain the higher returns. These interactions are more important in the presence of greater information asymmetry. The higher cost of equity among small innovators has implications for their investment, growth, and capital structure decisions.
Recommended citation: Stoffman, Noah, Michael Woeppel, and M. Deniz Yavuz. "Small innovators: No risk, no return." Journal of Accounting and Economics 74, no. 1 (2022): 101492.
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talks
Talk 1 on Relevant Topic in Your Field
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Conference Proceeding talk 3 on Relevant Topic in Your Field
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teaching
Teaching experience 1
Undergraduate course, University 1, Department, 2014
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Teaching experience 2
Workshop, University 1, Department, 2015
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working_papers
Two Centuries of U.S. Innovation: Firms’ Internal Networks and Resilience to Disasters
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Abstract. Using advanced machine learning methods, we construct a comprehensive database of the universe of approximately 12 million U.S. patents from 1836 to 2023. We analyze the resilience of innovation to disaster shocks using hurricane landfall data spanning two centuries. Major hurricanes destroy local innovative capacity for up to a decade and lead to permanent losses relative to the counterfactual. Multi-location firms reallocate resources from establishments in the landfall region and increase innovation in establishments elsewhere in the aftermath of a hurricane. These positive spillovers along firms’ internal networks increase aggregate innovation in counties distant from the hurricane.
Recommended citation: Kruttli, Mathias S. and Stoffman, Noah and Watugala, Sumudu W., Two Centuries of U.S. Innovation: Firms' Internal Networks and Resilience to Disasters (December 26, 2025).
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