Who Buys High and Sells Low: Trading against Expected Returns and Wealth Inequality

Thu, 01 Jan 2026 00:00:00 +0000

Research question and motivation: Wealth in the US is far more concentrated than income, even among the bottom 99%. In 2013, the next-49% (above the bottom 50%) earned 4.7 times the income of the bottom 50% but held 6.5 times the net worth (SCF 2013). Since housing is most Americans’ primary vehicle of wealth accumulation, differences in housing returns could amplify wealth gaps. Prior work studied heterogeneity in risk-taking in housing; this paper instead studies the timing (mistiming) of housing trades: do some households consistently “buy high and sell low” relative to EXPECTED asset returns, and what does that do to portfolio returns and wealth inequality? Theory is ambiguous: pro-cyclical credit supply (Mian-Sufi, Rajan) predicts poorer, credit-constrained households buy more in booms (when expected returns are low); extrapolative expectations (Barberis et al., Kaplan-Mitman-Violante) predict richer, less-constrained households buy more in booms. So it is an open empirical question.

Jung Sakong | Macro Paper Warehouse

Who Buys High and Sells Low: Trading against Expected Returns and Wealth Inequality