Does the stock market overreact? Recent capital market turbulences have
cast doubt whether the behaviour of stock markets is in line with
rational investor behaviour. To which extent stock returns are
predictable is the question at the heart of the controversy between the
paradigms of rational asset pricing and behavioural finance. This new
and revised edition discusses the empirical evidence from both
perspectives. Theory and empirical analysis are blended with feedback
from security analysts to offer a road towards a deeper understanding of
the underlying forces to drive performance in the stock market.
In his book "Irrational Exuberance" Robert Shiller offered an analysis
of the US stock market in 2000. The focus of his book was the level of
the stock market, which he thought to be overvalued at the time. This
monograph offers a complementary analysis of the cross section of stock
returns.