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Retail Investors and the Mispricing Puzzle

alphaarchitect

5 months ago

167 views

Institutional investors are frequently spoken of in the finance literature as “smart money” while retail investors are considered “noise traders” who suffer from a variety of behavioral biases and cognitive errors, and as less equipped to do meaningful research. Toomas Laarits and Marco Sammon, authors of June 2025 study “The Retail Habitat,” published in the October 2025 issue of the Journal of Financial Economics, investigated trading patterns among retail investors, specifically looking at st...

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