Markets can be irrational even if a large portion of investors are rational. It’s complex.
For one thing, many investors have to find hedged positions (e.g. pension fund managers), and often there aren’t good hedges for mispriced securities. Risk aversion and time discounting make things worse, especially if the irrational investors are more risk-tolerant than the rational ones.
Markets can be irrational even if a large portion of investors are rational. It’s complex.
For one thing, many investors have to find hedged positions (e.g. pension fund managers), and often there aren’t good hedges for mispriced securities. Risk aversion and time discounting make things worse, especially if the irrational investors are more risk-tolerant than the rational ones.
That’s why I mentioned all the assumptions ;)
In practice, just no.
Just no to
If yes, please provide support.