Overreaction hypothesis

The supposition that investors overreact to unanticipated news, resulting in exaggerated movements in stock prices followed by corrections.

Overreaction Hypothesis

A theory stating that the crowd overreacts to both good news and bad news. For example, when a company announces unexpectedly high earnings, this can create a buying panic that unjustifiably drives up the company's stock price. Likewise, when the earnings are unexpectedly bad, there can be a selling panic that drives down the price. One can use the overreaction hypothesis to make short-term profits in either direction.

单词	overreaction hypothesis
释义	Overreaction hypothesis Overreaction hypothesis The supposition that investors overreact to unanticipated news, resulting in exaggerated movements in stock prices followed by corrections. Overreaction Hypothesis A theory stating that the crowd overreacts to both good news and bad news. For example, when a company announces unexpectedly high earnings, this can create a buying panic that unjustifiably drives up the company's stock price. Likewise, when the earnings are unexpectedly bad, there can be a selling panic that drives down the price. One can use the overreaction hypothesis to make short-term profits in either direction.
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