Enhancing Stock Investment Returns with Learning Aggressiveness and Trust Metrics
time . A short position denotes the opposite scenario . Short selling indicates the sale of a security that is not currently owned by the seller . However , in order to close the position in the future , agents will have to buy the same amount of securities to cover their short selling positions .
4.3 Market Momentum
Market momentum phenomenon can be summarized as :
Despite the claims of equilibrium economists , rationality is not present in every transaction . Although stock market participants believe that they are rational in their decisions on stock purchasing , panics and frenzies also drive many market trends . Investors ’ greedy and panic-prone behaviors amplify regular ups and downs of the market , thus building up a bubble that inevitably ends up in a market crash . Some of the most famous examples include the tulip craze , the South Sea bubble , and the great depression . Also , the recent market trends in the Shanghai Composite Index , as shown in Fig . 2 , validate this phenomenon as well .
Figure 2 . Shanghai Composite Index ( Source : Yahoo Finance ).
55