Description
Investor Sentiment and Stock Market Performance: A Mixed-Methods Study of Psychological Factors in Investment
Abstract
The investor sentiments refer to the belief regarding the risks and value of the investments in future markets. It is completely developed by using the opinions and beliefs of investors which do not support any facts or theories. The financial theory in earlier times depends on the emotional belief of the investor regarding the market changes. Investor sentiment is used by technical analysts and day traders to understand the influence of investors’ opinions on market indicators. Generally the technical indicators help in measuring the accuracy and trueness of investor sentiment on the stock market performance. The study explains the influence of investor sentiment on the market performance by using the mixed method approach.
The investor sentiment is an important aspect for contrarian investors who perform trade in opposite to the other investors. For example, contrarian investors sell the stocks in a buying condition by assuming profit in contrast with others. The investor sentiment is uncertain because it prioritizes emotions over the actual business which might provide negative results. The qualitative analysis uses the information of interviews of investors and trade experts for understating their perception regarding investor sentiment. However the quantitative analysis uses the fundamental business valuations and scenarios for understanding the real performance of the stock.
The investor sentiment deals with the emotions, expectations, and concerns of the investors about the market performance. On the other hand, the fundamental stock value relies on the real performance and value of the business. Moreover the mixed method approach has combined the practical market insights with investor perceptions for understanding the investor sentiment. It explains that the performance of the stock completely depends on the business cases and valuations. Finally the investor sentiment deals with the emotions and perceptions of the investors about the market changes.
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