STOCK GOODIES PLAYS OF THE WEEK

[Black_NITE]

Psychological Factors Connected to Irrational Exuberance

Robert Shiller asserts that there is a human tendency towards "overconfidence in ones beliefs". Moreover, people often rely on intuition when making investment decisions. The decision process is not based on carefully considered facts backed by numbers and evidence. Instead, investors make investment decisions based on the opinion of others. This stems from the need to conform. Investors make decision based on "good stories" or stories that seem logical. Because people get their information from the same sources, there is little or no evidence of independent behavior. Instead, individuals getting the same information react the same way to produce a herd mentality.