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A Behavioral Finance Perspective on Trade Imbalance and Stock Prices

A Behavioral Finance Perspective on Trade Imbalance and Stock Prices

Paperback

Business General

ISBN10: 3639103955
ISBN13: 9783639103953
Publisher: Blues Kids Of Amer
Published: Dec 12 2008
Pages: 140
Weight: 0.43
Height: 0.30 Width: 6.00 Depth: 9.00
Language: English
The link between stock prices and investor trading, especially retail in-vestor trading, is at once both obvious and perplexing. Which is the cause, which the effect and who or what do we blame when stock market prices go wrong? Most theories of stock price anomalies rely on investor error, and many assume that retail investors are the source of the error. In this monograph, we explore this assumption. We consider the effect of investor category demand imbalance on prices across the entire stock market. We then focus on demand imbalance as a predictor of stock price 'bubble' crashes. Finally, we consider the cause and effect of investor category demand imbalances on stock prices as they display the dramatic price increases and falls that characterize a bubble. This monograph is required reading for anyone tempted to rely on individual investor decision making for an explanation of stock market prices.

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Business General