Market Credibility and Other Dietary Fads

Shahin Shojai and George Feiger ()
Additional contact information
George Feiger: Contango Capital Advisors, Postal: 1608 Fourth Street, Berkeley, CA 94710, http://www.contangoadvisors.com/

Journal of Financial Transformation, 2003, vol. 7, 63-70

Abstract: This paper seeks to identify why stock prices behave the way they do. We find that conventional economic theories are unable to explain why there are so many long bull and bear markets. We suggest that it is investor expectations of future market movements, based on their views of other investors' opinions, that determine stock prices. Where there is aggregate optimism, stock prices will rise and vice versa. We extend the work of the Rational Belief Hypothesis by suggesting that today's extremely high P/E ratios are associated with a substantial dislocation between investment horizons and economic reality.

Keywords: Market efficiency; Rational Belief Hypothesis; Asset Prices (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations:

Downloads: (external link)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=556214 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:0006

Access Statistics for this article

Journal of Financial Transformation is currently edited by Prof. Shahin Shojai

More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005.
Bibliographic data for series maintained by Prof. Shahin Shojai ( this e-mail address is bad, please contact ).