Professional vs. Non-Professional Investors: A Comparative study into the usage of Investment Tools

Abstract

Investors use varies tools in the investment process.
Some use technical or fundamental analysis, or both in
that process. The difference between those investments
tools have been well documented in the financial
literature. However, little have been written about the
difference investment behaviour between professional
and non-professional investors. The aim of the
following survey research is to examine differences
between professional portfolio managers to nonprofessional
investors in their approach towards
technical and fundamental analysis. We used online
survey in one of the leading business portals in addition
to asking professional investors in a leading investment
house in Israel. The results show no significant
difference between professional and non-professional
investors in terms of how frequently they use
fundamental and technical investment tools. Both
groups of investors use more frequently fundamental
tools than technical when they make buy/sell decisions.
Non- professional investors use more fundamental tools
such as "analysts' recommendations" when they buy
stocks and more technical tools such as "support and
resistance lines" when they sell stocks. Moreover, while
older investors prefer fundamental tools when they buy
and sell stocks, younger investors prefer to use
technical tools over fundamentals. This important
result might indicate that younger investor less believe
in a long time consuming fundamentals analysis than
their older colleagues and they rather use a more quick
method that does not demand an extensive effort and
knowledge.