But is this extreme optimism a contrarian sell signal?
The Significance of One-Sided Sentiment
Overwhelming consensus on a company can drive stock prices beyond their true fundamental value--understating or overstating inherent risks. These mispricings often present an opportunity for investors willing to go against conventional wisdom.
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.
The Stats: Evaluating Media Sentiment for Biogen Idec Inc. (BIIB)
2.0% of headlines have been classified as Negative (vs. an industry average of 13.17%).
Considering the academic research on investor herd behavior, is this extreme optimism a potential sell signal? Have investors become too bullish?
Any comments on these sentiment trends? Let us know in the comment section.