Not exact matches
Templeton, Graham and Buffett reasoned that herding behavior (including momentum traders and short - term speculators that
chase price trends) and overreaction bias (the tendency of
people to overreact to bad news) are strong forces in the market that can push
stocks far below their fair value.
«You can't always
chase momentum
stocks because at some point someone's left holding the door and you don't want to be that
person,» says Small.
The problem I foresee is that
people will
chase the hot strategy the way they
chased stocks or star mutual fund managers.
The intensity of investors» preferences may vary, but
chasing outlier returns from
stocks that are in vogue seems to be a steady habit... many
people find it very hard to change their mindset, and they just don't seem to learn from experience.
Sometimes volatile
stocks, like NASDAQ was a classic example, volatility became a fetish in and of itself, because it gave you upside risk capture, and
people were actually
chasing a lot of concepts, and stability became undervalued.