Lakonishok argued that because most of the market was occupied by institutional investors, their sense of ration will simply neutralize those irrational markups made by individual investors, therefore establishing market stability.
Based on this model, it is not difficult for to find that the herding effect caused by information asymmetry is scientifically based and persuasive.
The fear of missing out on a profitable investment idea is often the driving force behind herd instinct. Updated Aug 14, What is Herd Instinct? Some believes that herding effect will lead to a higher price volatility, there are two general direction of such researchers: theoretical models and experimental tests.
Besides, the experimenters introduced a new strategy method.
Evolution path from the normal phase to the herd phase. Non-Linear Dynamic Model Researchers of herding effect have given different conclusions of whether the herding effect will increase stock prices volatility.
The implication is that Montier has a history of being early but correct, which is somewhat disingenuous — he has been bearish on this bull market since at least