Frazzini and Lamont use mutual fund flows as a measure of individual investor sentiment for different stocks.

• Position: Conferences

Frazzini and Lamont use mutual fund flows as a measure of individual investor sentiment for different stocks. They find that high sentiment predicts low future returns at long horizons. Fund flows are dumb money: by reallocating across different mutual funds, retail investors reduce their wealth in the long run. This dumb money effect is strongly...