Investor and Analyst Herd Behavior Fuels Market Inflation

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Finance Berita

Investors,Analysts,Herd Behavior

Investors and analysts, despite believing in objectivity, are driven by biological instincts leading to herd behavior. This behavior, supported by a 1997 study, causes a 25% inflation in market valuations as they overlook fundamentals.

The last few weeks have been marked by intriguing comments from investors and analysts. Despite their belief in objectivity, they are actually driven by biological instincts. A 1997 study in Physica A suggests that financial markets are complex, like the human mind, and exhibit herd behavior without individual awareness. Investors and analysts follow the herd, justifying their actions post-fact.

This behavior is due to hard-wired emotional responses, leading to a 25% inflation in valuations as they overlook market fundamentals

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