RT Journal Article
SR Electronic
T1 Noise Trading and Market Efficiency
JF The Journal of Trading
FD Institutional Investor Journals
SP 37
OP 44
DO 10.3905/jot.2007.688946
VO 2
IS 3
A1 Damir Tokic
YR 2007
UL https://pm-research.com/content/2/3/37.abstract
AB Due to significant agency costs, so called “passive investors” are more likely to engage in speculation and positive feedback trading than in actual passive investment strategies. As a result, all other markets participants engage in some form of willing/unwilling positive feedback trading, which is likely to produce significant and persistent price bubbles. The suspected behavior of “passive investors” is, we argue, the major reason why markets might not be efficient.TOPICS: Passive strategies, security analysis and valuation, portfolio theory