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The Impact of Investors’ Psychological Sentiment and Behavioral Bias on Stock Returns

Songyuan Liu

Abstract


With the continuous development of social economy, only relying on traditional fnance can not well explain some fnancial anom-alies in the market, especially the economic research related to human nature also needs the support of behavioral fnance. Based on the ex-isting domestic and foreign scholars’research on the infuencing factors of investors’stock returns, this paper took investors’psychological emotions and behavioral deviations as an important research direction with the supplement of behavioral fnance theory. By analyzing inves-tors’common psychology of greed, fear, conformity and overconfdence, the author found that investors’emotions would have an impact on their stock returns. Through the analysis of loss aversion, overreaction and underreaction, and disposition efect, the author further studied the impact of investor behavior bias on stock returns. Finally, the author on investor psychology according to the aforementioned circumstance, the behavior deviation of exploration, for investor sentiment and behavior put forward the corresponding opinions and suggestions.

Keywords


Behavioral Finance; Psychological Emotion; Behavioral Bias

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References


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DOI: http://dx.doi.org/10.18686/fm.v8i6.11685

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