After all, shouldn't such extreme optimism in the media raise a flag? Can the company continue to exceed such lofty expectations?
Trading on Investor Herd Behavior
There have been academic studies that show investors tend to place too much importance on recent information, also known as psychological anchoring.
During periods of negative news, investors may continue to sell a stock, pushing it below its fair value. Conversely, during periods of positive news, investors may get overly optimistic and push the stock beyond fair value.
This is why we built Contextuall's sentiment technology.
By detecting herd behavior for specific stocks and industries, our users can lower their risk, and perhaps even profit, from the one-sided groupthink of others.
Sentiment Stats: Synopsys Inc. (SNPS) Compared to the Semiconductor Industry
2.74% of headlines have been classified as Negative (vs. an industry average of 13.03%).
So, considering this extreme optimism, relative to industry averages, is most of the good news already priced into the stock?
Thoughts? Let us know in the comment section to the right.