Unformatted text preview: only on the negative side. The optimistic however, will overpower the market versus the pessimist because those with negative feelings will stay on the sidelines while those with good outlooks will continue to buy. Companies that are well established have less lee way to be impacted by emotions from investors. This is because they usually have less room for growth and people have a strong understanding of the abilities of the corporation. Arbitrage is the capturing of moody investors actions to make a profit. In a survey, speculative stocks with negative sentiment at the beginning of the year had a higher return than ones with postive sentiment. Price bubbles are not unusual and have happend several times since the 20th century. They soar tremendously but will eventually bust. Investing can also be seen as a means of gambling. People who enjoy gambling will seek stocks that offer the same sort of low cost high return probability and will trade much more often to seek quick riches....
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This note was uploaded on 09/13/2011 for the course FIN 250 taught by Professor Johansen during the Fall '10 term at Boise State.
- Fall '10