Jump to ContentJump to Main Navigation
Beyond Greed and FearUnderstanding Behavioral Finance and the Psychology of Investing$
Users without a subscription are not able to see the full content.

Hersh Shefrin

Print publication date: 2002

Print ISBN-13: 9780195161212

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0195161211.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see www.oxfordscholarship.com/page/privacy-policy).date: 17 November 2018

Picking Stocks to Beat the Market

Picking Stocks to Beat the Market

Chapter:
(p.69) Chapter 7 Picking Stocks to Beat the Market
Source:
Beyond Greed and Fear
Author(s):

Hersh Shefrin (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/0195161211.003.0007

The third theme of behavioral finance is inefficient markets. In recent years scholars have produced considerable evidence that heuristic‐driven bias and frame dependence cause markets to be inefficient. Scholars use the term “anomalies” to describe specific market inefficiencies. For this reason, Eugene Fama characterizes behavioral finance as “anomalies dredging.” This chapter discusses what behavioral finance implies about picking stocks and beating the market. Market efficiency is a direct challenge to active money managers, because it implies that trying to beat the market is a waste of time. Why? Because no security is mispriced in an efficient market, at least relative to information that is publicly available. Inside information may be another story. The chapter discusses whether the stock recommendations made by brokerage houses have beaten the market, and a series of effects discussed in the literature: the winner–loser effect, momentum, the size effect, the book‐to‐market effect, the effect of a change in analysts' recommendations.

Keywords:   book‐to‐market, efficient prices, Fortune study of most admired companies, glamour stocks, growth, hindsight bias, momentum, overconfidence, recommended stocks, regret, value, winner–loser effect

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .