Bubble Investors: What Were They Thinking?

William Goetzmann () and Ravi Dhar ()
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Ravi Dhar: International Center for Finance at Yale School of Management

Yale School of Management Working Papers from Yale School of Management

Abstract: We surveyed a large sample of investors who bought stock in a telecommunications company at least once in the 1999-2000 period. We solicited their views on the efficiency of the stock market, and the basis for their personal trading decisions. A significant fraction appear to hold beliefs inconsistent with various implications of the efficient market hypothesis. Their motives for trade are based upon a belief in the value of fundamental research and a belief in the importance of past price trends. These investors on average believe that markets over-react to news announcements. Many admitted to buying stocks they believed at the time to be over-valued, but claimed to have done so on the anticipation that the share prices would continue to rise.

New Economics Papers: this item is included in nep-his
Date: 2005-04-13
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Persistent link: http://EconPapers.repec.org/RePEc:ysm:somwrk:ysm446

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