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Behavioral Finance Reveals Market Inefficiencies Driven by Human Psychology

Behavioral Finance Reveals Market Inefficiencies Driven by Human Psychology

Published:
2025-05-29 07:39:01
16
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Traditional financial theories often assume rational investors, but behavioral finance exposes the profound impact of emotions and cognitive biases on market dynamics. The Efficient Market Hypothesis (EMH) crumbles under real-world scrutiny, as fear, greed, and social pressures routinely distort asset prices.

Investors consistently deviate from logical decision-making, creating predictable mispricings. These psychological blind spots—from herd mentality to overconfidence—generate exploitable opportunities. Markets aren’t efficient; they’re emotional battlegrounds where disciplined traders profit from collective irrationality.

|Square

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