Stock-Market Psychology

The rationale behind how people value and trade stocks is of unparalleled interest to governments, companies and other participants in stock markets. This volume focuses on the way in which investors process information and form expectations about future gains. It argues that humans fall short of th [...]
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The rationale behind how people value and trade stocks is of unparalleled interest to governments, companies and other participants in stock markets. This volume focuses on the way in which investors process information and form expectations about future gains. It argues that humans fall short of the perfect information processing required by theory, and that their expectations are based on more than just future company earnings. The author discusses the psychology of investing, providing detailed coverage of how financial expectations are formed, how complex decisions are made and how emotions and influence from others affect the financial decisions of individuals. Empirical studies featured in the book suggest that many, if not most, stockholders have long-term goals, believe in certain stocks, and make few transactions - behaviour which, argues the author, may have a stabilizing influence upon stock prices.