Investor Style in Stock Investment Decisions

Abstract

Every investor has different investment behavior. These differences are called investor style. Investor style can be different because of demography, personality, and different transaction times. The purpose of this study is to reduce the mistakes made by individual investors style. Some of the methods used in this research are Analytical Hierarchy Process (AHP), secondary data, Focus Group Discussion (FGD), and stock simulation with algorithm. All of these methods emphasize the decision making process when buying and selling stocks. The results provide a set of price targets and types of stocks purchased. Accounting information remains the main ingredient for making these decisions. Accounting information that is often used is Price Book Value (PBV) to select undervalued stocks. Additional results from depth interviews, average return obtained based on the time horizon, the beginning of the transaction up to 1 year has a stock return of around 2-4 percent. A time horizon of 1-3 years will get a return of around 10 percent. Time horizon of more than 3 years, stock returns will rise again. The average long-term stock investment is around 20 percent. Personalities based on Dominance, influence, Steadiness, Conscientiousness (DISC) that fit the stock investment style tend to be a precisionist personality, a style of investor that systematically follows existing trading orders. The stock simulation method also uses a trading algorithm with stages according to the AHP results, in order to be able to see the investment style of stocks in the Indonesian capital market.