The Psychology of the Stock Market

The Efficient Market Hypothesis argues that stock markets are rational – they take into account all relevant information, and incorporate it in an unbiased way. This talk will present evidence that stock prices are instead driven by human psychology. The market overreacts to some types of information yet under-reacts to others; it is driven by emotions rather than purely economic fundamentals. The lecture gives profitable trading strategies that investors can use to exploit these biases.