Month: February 2017

Evidence for irrational traders

Evidence for irrational traders

28 Feb 2017 |

Irrational traders know the fundamental value of a security, but rather than basing their trading decisions on this, they base it on their expectations of how other market participants will behave. Here we discuss experimental evidence demonstrating this irrational behaviour. We consider bubbles and IPOs as real life examples.

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Who are the deluded investors? Probably you and me!

Who are the deluded investors? Probably you and me!

16 Feb 2017 |

Deluded investors are foolish market participants who are uninformed but transact in financial markets with the delusion that they are informed. They would trade actively in an attempt to outperform when a security is mispriced according to their analysis. Deluded participants are, however, wrong in believing that they know the fair value of the security.

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