{"691196":{"#nid":"691196","#data":{"type":"news","title":"Why Where the Money Comes From Matters","body":[{"value":"\u003Cp\u003EIn finance,\u0026nbsp;there\u2019s\u0026nbsp;a simple assumption that money is money. A dollar is a dollar, no matter where it comes from. \u0026nbsp;\u003C\/p\u003E\u003Cp\u003EBut a forthcoming study in the Journal of Financial and Quantitative Analysis by\u0026nbsp;\u003Ca href=\u0022https:\/\/www.scheller.gatech.edu\/directory\/faculty\/he\/index.html?_gl=1*14qr2yj*_up*MQ..*_ga*MTEwMzMyOTU3LjE3ODQ2NTQwNzc.*_ga_8XJDVR2ZKP*czE3ODQ2NTQwNzYkbzEkZzEkdDE3ODQ2NTQwODIkajU0JGwwJGgxNTg3NTY4NjE2\u0022\u003EXindi He\u003C\/a\u003E, assistant professor of finance at the Scheller College of Business, and his co-author\u0026nbsp;\u003Ca href=\u0022https:\/\/en.saif.sjtu.edu.cn\/faculty-research\/zhu-ning\u0022\u003ENing Zhu\u003C\/a\u003E, professor at the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, suggests that individual investors don\u2019t always treat money as fungible when making decisions in their brokerage accounts.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003ETheir findings complicate that assumption. \u0026nbsp;\u003C\/p\u003E\u003Cp\u003EHe and Zhu\u2019s research\u0026nbsp;shows\u0026nbsp;that investors often treat money differently depending on where it comes from. A dollar transferred from a savings account does not feel the same as a dollar generated by selling a stock, even when both sit side by side as cash in the same brokerage account.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u003Cstrong\u003EThe Idea of \u201cCash Temperature\u201d\u0026nbsp;\u003C\/strong\u003E\u003C\/p\u003E\u003Cp\u003ETo capture that difference, He introduced the idea of \u201ccash temperature.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cI would describe cash temperature as a way to measure how money feels to an investor based on its recent history,\u201d\u0026nbsp;He\u0026nbsp;said. \u201c\u2018Cold\u2019 cash is money that recently came from a stable source, such as a savings account. \u2018Hot\u2019 cash is money generated by selling stocks or other risky assets.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EThat distinction might sound subtle, but in practice, it shapes how people invest. As He and his co-author analyzed detailed brokerage data, a clear and surprising pattern\u0026nbsp;emerged.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cWhat struck us was how systematic the pattern was,\u201d\u0026nbsp;He\u0026nbsp;said. \u201cThis was not just about one measure of risk.\u201d\u0026nbsp;\u003Cbr\u003EAcross nine dimensions, investors using colder cash behaved more cautiously. They chose\u0026nbsp;less\u0026nbsp;volatile stocks, stocks with weaker recent run-ups and lower attention measures, and stocks\u0026nbsp;more\u0026nbsp;likely to be part of major market indexes. They also held these positions longer, and the stocks had better\u0026nbsp;subsequent\u0026nbsp;performance.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cThe consistency across these dimensions made the pattern much more compelling,\u201d\u0026nbsp;He\u0026nbsp;said.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EBy contrast, when investors used hotter\u0026nbsp;cash,\u0026nbsp;money that had already been exposed to market risk, they were more willing to take chances. They pursued riskier stocks, often without better returns to show for it.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cThe evidence points to harm, especially when investors treat hot cash as easier to risk,\u201d\u0026nbsp;He\u0026nbsp;said. \u201cIn our data, hotter cash leads investors to buy riskier stocks, and those purchases are followed by lower\u0026nbsp;subsequent\u0026nbsp;returns.\u0026nbsp;Investors take more risk but do not appear to be rewarded for it.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u003Cstrong\u003EMeaning Behind the Money\u0026nbsp;\u003C\/strong\u003E\u003C\/p\u003E\u003Cp\u003EAt the heart of this behavior is something deeply intuitive.\u0026nbsp;People assign meaning to their money.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cA dollar from savings may feel like protected wealth, while a dollar from selling a stock may feel like money already set aside for investing,\u201d\u0026nbsp;He\u0026nbsp;said.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EIn a pre-registered experiment, that feeling showed up in how people experienced loss. Participants reported that a hypothetical loss felt more painful when the money was framed as coming from a savings account than when it was framed as coming from a brokerage account.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cThat suggests that the source of money changes how investors experience potential losses,\u201d\u0026nbsp;He\u0026nbsp;said.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EThe effect plays out in everyday decisions. Someone who transfers $5,000 from savings into an investment account may tread carefully, treating it as something to preserve. But that same person might take bigger risks with money that came from a recent stock sale, seeing it as already \u201cin the market.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EThe study also finds that these mental labels are not fixed.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cWe were also surprised by how dynamic the effect was,\u201d he said. \u201cCash labels were not fixed forever. They were refreshed as money moved through the brokerage account and faded over time when there was no salient account activity.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u003Cstrong\u003EWhat Investors Can Learn\u0026nbsp;\u003C\/strong\u003E\u003C\/p\u003E\u003Cp\u003EFor investors, the takeaway is\u0026nbsp;simple but powerful. Before deciding, pause and strip away the story attached to the money.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cThe practical lesson is to pay attention to the mental labels attached to cash,\u201d\u0026nbsp;He\u0026nbsp;said. \u201cAsk yourself, \u2018Would I still make this purchase if I ignored where the cash came from and evaluated the stock on its own merits?\u2019\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EWhile money may be identical on paper, it does not always feel that way in practice. Its source can shape the stocks investors choose and the returns that follow.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u003Ca href=\u0022https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=4211981\u0022\u003ERead More: \u0022Portfolio Choice with Non-Fungible Brokerage Cash\u0022\u003C\/a\u003E\u003C\/p\u003E","summary":"","format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003EA study by Xindi He, assistant professor of finance at the Scheller College of Business, forthcoming in the Journal of Financial and Quantitative Analysis, shows that investors treat brokerage cash differently based on its source, leading them to take greater risks with \u201chot\u201d money from prior trading, often with lower returns.\u003C\/p\u003E","format":"limited_html"}],"field_summary_sentence":[{"value":"Investors treat brokerage cash differently based on its source, leading them to take greater risks with \u201chot\u201d money from prior trading, often with lower returns."}],"uid":"36730","created_gmt":"2026-07-21 17:16:57","changed_gmt":"2026-07-23 20:24:20","author":"klowe36","boilerplate_text":"","field_publication":"","field_article_url":"","location":"Atlanta, GA","dateline":{"date":"2026-07-21T00:00:00-04:00","iso_date":"2026-07-21T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"680637":{"id":"680637","type":"image","title":"Xindi He, assistant professor of finance at the Scheller College of Business.","body":null,"created":"1784654063","gmt_created":"2026-07-21 17:14:23","changed":"1784654150","gmt_changed":"2026-07-21 17:15:50","alt":"Xindi He","file":{"fid":"264926","name":"xindi-he.jpg","image_path":"\/sites\/default\/files\/2026\/07\/21\/xindi-he.jpg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2026\/07\/21\/xindi-he.jpg","mime":"image\/jpeg","size":271925,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2026\/07\/21\/xindi-he.jpg?itok=aicOJkHv"}}},"media_ids":["680637"],"related_links":[{"url":"https:\/\/www.scheller.gatech.edu\/news\/2026\/why-where-money-comes-from-matters.html?_gl=1*1r7cgip*_up*MQ..*_ga*MTEwMzMyOTU3LjE3ODQ2NTQwNzc.*_ga_8XJDVR2ZKP*czE3ODQ2NTQwNzYkbzEkZzEkdDE3ODQ2NTQwODEkajU1JGwwJGgxNTg3NTY4NjE2","title":"Read More"}],"groups":[{"id":"1188","name":"Research Horizons"}],"categories":[{"id":"139","name":"Business"},{"id":"135","name":"Research"}],"keywords":[{"id":"12132","name":"finance and investment"}],"core_research_areas":[],"news_room_topics":[],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[],"email":["kristin.lowe@scheller.gatech.edu"],"slides":[],"orientation":[],"userdata":""}}}