Overreaction Hypothesis

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Overreaction hypothesis

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

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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Contrarian			This finding supports the overreaction hypothesis and sets grounds for contrarian portfolio strategies. On risk and return in MENA capital markets by Girard, Eric; Omran, Mohamed; Zaher, Tarek / International Journal of Business The overreaction hypothesis is consistent with the notion that prices can move beyond equilibrium values, but will eventually reverse themselves as traders sort through the information. The information content of price limit moves by Belcher, Larry; Ma, Christopher K.; Mallett, James E. / International Journal of Business The Overreaction Hypothesis (OH) explains these inefficiencies by predicting that prices will be undervalued preceding unfavorable announcements. The behavior of secondary European stock markets to positive and ... by Shachmurove, Yochanan / International Journal of Business			Overfull Employment Overfunded Pension Plan Overfunding Overgrowth Overhang Overhanging Bond Overhanging Supply Overhead Overhead Resistance Level Overheating overimprovement Overinvestment Overissue Overlap the Market Overlapping Debt Overlay Strategy Overmargined Overnight Deal Overnight Delivery Risk Overnight Index Swap Overnight Position Overnight Repo Overnight Trading Overperform Overreaching Overreaction Hypothesis override Overriding Royalty Interest Overrun Overschrijding van de bevoegdheid Overseas Economic Cooperation Fund Overseas Private Investment Corporation Overshooting Oversight and Government Reform Committee Oversold Overstay Oversubscribed Oversubscribed Issue Oversubscription Oversubscription Privilege Overtime Overtime Ban Overtrade Overtrading Overvaluation Overvalued Overweight Overweighted Overwithholding Overwrite Overwriting			overreach overreach overreach overreach overreach boot overreach boot overreach boot Overreach, Sir Giles overreached overreached overreached overreacher overreacher overreacher overreachers overreaches overreaches overreaches overreaching overreaching overreaching overreaching overreact overreact overreacted overreacted overreacting overreacting overreaction overreaction Overreaction Hypothesis overreactions overreactions overreactive overreactive overreacts overreacts Overread Overready Overreckon overreckoning Overred Overred Overred overrefine overrefined overrefinement overrefines overrefining overregulate overregulated overregulates overregulating overregulation overreliance overreliant Overrent overrepresentation overrepresented overresponse

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