(Effective) Application of Theory

In Financial Management terms,

Overreaction: A biased response in the share price to (public or private) information in which the initial price movement can be expected to be reversed.

Underreaction: A biased response in the share price to (public or private) information in which the initial price movement can be expected to continue.

In Timon & Phumba terms,

Overreaction: A biased response in the kiasu level to (public or private) information in which the initial (additional) panicking + studying levels CANNOT be expected to be reversed i.e:

jinn.jpg

Underreaction: A biased response in the kiasu level to (public or private) information in which the initial (additional) panicking + studying levels CAN be expected to slowly continue.

fai.jpg

Refer to Financial Management lecture 12 for further understanding if need be.

Addition:

On a totally unrelated note, actually I was reading Kenny Sia’s blog when I came across this.

Look, fellow Malaysians, linked here are the people representing you and they are the ones dictating your lives. You would probably say: “sigh… dah biasa-lah ngan antics mrk ni…” I concur aloud in sorrow. “MCBKNNCCBENGKAUDNSMCHHKCPUKIMAK“….err…..woopsie daisy?

F A I

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