Stock Market Efficiency and Rational Thinking ... Dangerous Theories
The power of emotion and exponential power of group thinking undermines the market efficiency theory. Volatility, a sign of inefficiency and emotion, occurs when investors under-appreciate and undervalue or over appreciate and overvalue information that is digested in the process of setting stock prices.
I believe the success of the great investors came from a combination of doing the analysis (of course) and more importantly, understanding and capitalizing on the emotion of investors.
Please click here to view the Winter 2009 newsletter.This material was created while Al Boris was at a previous broker/dealer and has been rebranded to reflect his current firm, Alex. Brown, a Division of Raymond James. It is provided for historical purposes only. Investors should not act on the historical comments which do not reflect current market conditions.
