Stock Market Overreact

Does the Stock Market Overreact? Research in experimental  psychology suggest that, in violation of Bayes’ rule, most people tend to “overreact” to unexpected and dramatic news events. This study of market efficiency investigates whether such behavior affects stock prices. The empirical evidence based on CRSP monthly return data, is consistent with the overreaction hypothesis.

H/T noahpinionblog.blogspot.com

Stock Market Overreact by ValueWalk.com


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