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Bubble Investors: What Were They Thinking?

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  • Ravi Dhar
  • William Goetzmann

Abstract

A variety of models have been proposed to explain the rise and fall of stocks prices in the U.S. around the turn of the millennium. Many models focus on behavioral explanations in which and investor beliefs about their own capabilities and the efficiency of market prices play a role. In this paper we provide empirical evidence on these beliefs. We surveyed a large sample of investors who bought stock in a telecommunications company at least once in the 1999-2000 period. We solicited their views on the efficiency of the stock market, and the basis for their personal trading decisions. A significant fraction appear to hold beliefs inconsistent with various implications of the efficient market hypothesis. Their motives for trade are based upon a belief in the value of

Suggested Citation

  • Ravi Dhar & William Goetzmann, 2005. "Bubble Investors: What Were They Thinking?," Yale School of Management Working Papers ysm446, Yale School of Management, revised 01 Aug 2006.
    • Handle: RePEc:ysm:wpaper:ysm446
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    References listed on IDEAS

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