positive information related to a higher-performing publicly-traded stock, and that the same investors tend to under-react to negative information related to a higher performing publicly-traded stock. Conversely, investors tend to under-react to positive information related to a poorer performing publicly-traded stock, while over-reacting to negative information related to such stocks.
Over-reactions and under-reactions to publicly-traded stock-specific information tend to occur (according to behavioural finance theory) because (a) investors over-value positive information and under-value negative information related to higher-performing stocks, and (b) investors under-value positive information and over-value negative information related to a lower-performing stock. Because stock-specific information is not valued rationally, the level of funds directed to specific stocks by investors frequently is inconsistent with the realistic fut
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