Investor Overconfidence Margin Trade And Market Efficiency
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Investor Overconfidence Margin Trade And Market Efficiency
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Author : Mingsheng Li
language : en
Publisher:
Release Date : 2017
Investor Overconfidence Margin Trade And Market Efficiency written by Mingsheng Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
We investigate the effect of investor overconfidence and margin trades on market efficiency around a market crash. We find that the price delay in a pre-crash period is about twice the price delay in a post-crash period. After a market crash, investors become more sensitive to market movements, resulting in small price delay and high price synchronicity. Margin traders not only trade on market trends but also put additional force on it, escalating the pyramiding and de-pyramiding effects caused by the shift in market sentiment. Finally, our results show that negative information travels slowly only when investors are overconfident.
The Danger Of Investor Overconfidence
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Author : Mingsheng Li
language : en
Publisher:
Release Date : 2017
The Danger Of Investor Overconfidence written by Mingsheng Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
We investigate how investor overconfidence and margin trades affect market efficiency around a market crash. We find that the price delay before a crash is about twice the price delay after a crash and that negative information travels slowly only when market sentiment is high because of investor overconfidence and attribution bias. After a market crash, constrained investors become more sensitive to market movements, resulting in high price synchronicity. In addition, margin traders not only trade on market trends but also generate additional momentum in prices, escalating the pyramiding and de-pyramiding effects caused by the shift in market sentiment.
Market Efficiency In An Irrational World
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Author : Kent Daniel
language : en
Publisher:
Release Date : 2000
Market Efficiency In An Irrational World written by Kent Daniel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with Efficient market theory categories.
This paper explains why investors are likely to be overconfident and how this behavioral bias affects investment decisions. Our analysis suggests that investor overconfidence can potentially generate stock return momentum and that this momentum effect is likely to be the strongest in those stocks whose valuation requires the interpretation of ambiguous information. Consistent with this, we find that momentum effects are stronger for growth stocks than value stocks. A portfolio strategy based on this hypothesis generates strong abnormal returns that do not appear to be attributable to risk. Although these results violate the traditional efficient markets hypothesis, they do not necessarily imply that rational but uniformed investors, without the benefit of hindsight, could have actually achieved the returns. We argue that to examine whether unexploited profit opportunities exist, one must test for what we call adaptive-efficiency, which is a somewhat weaker form of market efficiency that allows for the appearance of profit opportunities in historical data, but requires these profit opportunities to dissipate when they become apparent. Our tests reject this notion of adaptive-efficiency
Finance For Normal People
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Author : Meir Statman
language : en
Publisher: Oxford University Press
Release Date : 2017
Finance For Normal People written by Meir Statman and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with BUSINESS & ECONOMICS categories.
Behavioral finance presented in Finance for Normal People is a second generation behavioral finance. The first generation, starting in the early 1980s, largely accepted standard finance's notion of people's wants as “rational” wants - restricted to the utilitarian benefits of high returns and low risk. That first generation commonly described people as “irrational” - succumbing to cognitive and emotional errors and misled on their way to their rational wants. The second generation describes people as normal. It begins by acknowledging the full range of people's normal wants - hope for riches and freedom from the fear of poverty, nurturing our children and families, being true to our values, gaining high social status, playing games and winning, and more. It distinguishes normal wants from errors, and offers guidance on using shortcuts and avoiding errors on the way to satisfying normal wants. People's normal wants, even more than their cognitive and emotional shortcuts and errors, underlie answers to important questions of finance, including saving and spending, portfolio construction, asset pricing, and market efficiency. These are presented in this book.We often hear that behavioral finance is nothing more than a collection of stories about irrational people misled by cognitive and emotional errors, that it lacks the unified structure of standard finance. Yet today's standard finance is no longer unified because wide cracks have opened between its theory and the evidence. This book offers behavioral finance as a unified structure that incorporates parts of standard finance, replaces others, and includes bridges between theory, evidence, and practice.
Short Introduction To Corporate Finance
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Author : Raghavendra Rau
language : en
Publisher: Cambridge University Press
Release Date : 2017-01-11
Short Introduction To Corporate Finance written by Raghavendra Rau and has been published by Cambridge University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-11 with Business & Economics categories.
The Short Introduction to Corporate Finance provides an accessibly written guide to contemporary financial institutional practice. Rau deploys both his professional expertise and experience of teaching MBA and graduate-level courses to produce a lively discussion of the key concepts of finance, liberally illustrated with real-world examples. Built around six essential paradigms, he builds an integrated framework covering all the major ideas in finance over the past half-century. Ideal for students and practitioners alike, it will become core reading for anyone aspiring to become an effective manager.
Stocks Bonds Bills And Inflation
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Author : Roger G. Ibbotson
language : en
Publisher:
Release Date : 1989
Stocks Bonds Bills And Inflation written by Roger G. Ibbotson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1989 with Actions (Titres de société) - Prix - Prévision categories.
Investor Behavior
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Author : H. Kent Baker
language : en
Publisher: John Wiley & Sons
Release Date : 2014-02-10
Investor Behavior written by H. Kent Baker and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-02-10 with Business & Economics categories.
WINNER, Business: Personal Finance/Investing, 2015 USA Best Book Awards FINALIST, Business: Reference, 2015 USA Best Book Awards Investor Behavior provides readers with a comprehensive understanding and the latest research in the area of behavioral finance and investor decision making. Blending contributions from noted academics and experienced practitioners, this 30-chapter book will provide investment professionals with insights on how to understand and manage client behavior; a framework for interpreting financial market activity; and an in-depth understanding of this important new field of investment research. The book should also be of interest to academics, investors, and students. The book will cover the major principles of investor psychology, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion. Specific sections of the book will delve into the role of personality traits, financial therapy, retirement planning, financial coaching, and emotions in investment decisions. Other topics covered include risk perception and tolerance, asset allocation decisions under inertia and inattention bias; evidenced based financial planning, motivation and satisfaction, behavioral investment management, and neurofinance. Contributions will delve into the behavioral underpinnings of various trading and investment topics including trader psychology, stock momentum, earnings surprises, and anomalies. The final chapters of the book examine new research on socially responsible investing, mutual funds, and real estate investing from a behavioral perspective. Empirical evidence and current literature about each type of investment issue are featured. Cited research studies are presented in a straightforward manner focusing on the comprehension of study findings, rather than on the details of mathematical frameworks.
Traders
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Author : Mark Fenton-O'Creevy
language : en
Publisher: OUP Oxford
Release Date : 2004-09-16
Traders written by Mark Fenton-O'Creevy and has been published by OUP Oxford this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-09-16 with Business & Economics categories.
This is a book about traders in financial markets: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book about how traders are managed - the best and the worst examples - and about the institutions they inhabit: firms, markets, cultures, and theories of how the world works. How these institutions function, how traders are managed, and how traders view the world, all have profound effects on the wider financial environment. This book explores these relationships and their implications theoretically and empirically. The data discussed in this book draw on a three-year project researching the psychological and social influences on the behaviour and performance of traders in investment banks. 118 traders and managers in four leading organizations participated. Data were collected through semi-structured interviews supplemented by questionnaires, measures of personality, risk propensity and a novel computer based measure designed to assess illusion of control and other cognitive biases. The authors' approach to writing this book is explicitly interdisciplinary. They draw on sociology, psychology and economics in order to illuminate the work of traders and the world they inhabit. The book is a significant contribution to the growing body of research and literature which suggests that if we are to effectively understand financial markets and the actors who inhabit them, the insights of neo-classical financial economics need supplementing with a broader range of social science approaches. The book will be of value to researchers interested in the functioning of financial institutions and markets, to those with an interest in market regulation and to practitioners wishing to benefit from an analytical perspective on the challenges facing traders and their managers.
Behavioral Corporate Finance
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Author : Hersh Shefrin
language : en
Publisher: College Ie Overruns
Release Date : 2017-04-16
Behavioral Corporate Finance written by Hersh Shefrin and has been published by College Ie Overruns this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-04-16 with Corporations categories.
Understanding The Investor
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Author : Antonietta Bonello
language : en
Publisher: Emerald Group Publishing
Release Date : 2019-06-19
Understanding The Investor written by Antonietta Bonello and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-06-19 with Business & Economics categories.
In finance, understanding investors and their motivations is key for any business and policy-maker. Understanding the Investor: A Maltese Study of Risk and Behavior in Financial Investment Decisions offers a nuanced view of the Maltese investor and the Malta Stock Exchange, and its implications on the wider financial world.