Super Rich Were Leading Contributors to the Volatility of the Market Immediately Following the 2008-9 Financial Crisis.
“Who Sold During the Crash of 2008-9? Evidence from Tax-Return Data on Daily Sales of Stock” was coauthored by Jeffrey Hoopes (Ohio State University), Patrick Langtieg (Internal Revenue Service), Stefan Nagel (University of Michigan), Daniel Reck (University of Michigan), Joel Slemrod (University of Michigan), and Bryan Stuart (University of Michigan). The question examined in this paper was focused on who sold stock during the crash of 2008 and 2009.
“The innovation of the paper is, for the first time anywhere, we know on a daily basis who sold,” explains Joel. If you own a stock that is taxable when you sell, you have to report that for tax purposes. In fact, your broker will have to send a record to you and the IRS about what stock you sold, on what day, and what you sold it for. That is hundreds of millions of records.” This rich data set gave the researchers the first daily series on who sold.
They looked at who sold on the days, or right after the days, when the stock market was very volatile. They found that, “Investors at the very top of income distribution—both the top 1 percent and even the top 0.1 percent—are, along with older investors, much more likely to sell stock during times of market tumult than other investors,” explains Stefan. This information was unknown before the publication of this paper. This paper is important not only to aid in understanding what happened in 2008 and 2009, but also as a point of reference so that a similar crisis can be better managed or even prevented in the future.
Read, “Who Sold During the Crash of 2008-9? Evidence from Tax-Return Data on Daily Sales of Stock” in its entirety!
Other Press on This Research
- "Who sells when the chips are down on Wall Street?" from Michigan News
- "When the Rich Jump Ship" from The Atlantic
- “The Super Rich Were the First to Bail During the Financial Crisis” from Bloomberg
- "The Superrich Are the First to Sell When Markets go South" from Fortune