Two out of three retail investors in South Korea keep holding a stock or buy more even after losses occur in stock investing. Investment performance showed a close relationship with actual investing behaviour such as investing experience and how investors respond to losses, rather than subjective risk appetite.

Toss Insight, the financial management research institute of Toss, on Nov. 12 released a report titled "Analysis of Investment Behaviour and Trends of Domestic Retail Investors" based on an analysis of a survey of 1,000 South Korean retail investors.

The survey found 42.2 percent said they keep holding loss-making stocks, while 24.4 percent said they buy more. The combined share came to 66.6 percent. By contrast, 23.9 percent said they cut losses in line with their principles.

Over the past year, 26.5 percent of the rule-based stop-loss group experienced losses, lower than the group that kept holding loss-making stocks at 41.7 percent. By investing experience, the share of investors with less than 1 year of experience who reported losses was 48.7 percent, higher than investors with 3 to 5 years of experience at 26.7 percent.

In particular, the share of loss experience was 56.5 percent among the group that met all four vulnerable behaviours: less than 3 years of investing experience, a holding period under 6 months, concentrated investment in a small number of stocks and neglecting loss-making stocks. That was about 3.6 times the 15.7 percent for the group with none of those factors.

A Toss Insight official said the research shows it is important to look at actual investing behaviour rather than an investor's age or risk appetite. The official said education and support based on investing behaviour are needed so investors can accurately understand their risks and establish rational investing principles.