Overreaction
Overreaction is a market hypothesis that states investors will react excessively to new information provided about a given security.
For example, if a company releases business results that beat analyst expectations, even for just a small amount, investors will continuously bid the stock up and above its intrinsic value. The same concept will be seen in the case of the results below analyst expectations, but overreaction will take opposite course.
Overreactions usually last for just a couple of days.
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