When Greece beat France in Euro 2004, the stock market shifted. When Allbirds rebranded as an AI company, its stock rose 600%. When British radio plays happy music, the FTSE improves.
So, is the stock market just vibes? Does national mood actually move the market?
That’s what today’s guest on Nudge, Alex Edmans, is here to answer.
Alex is a professor of finance at London Business School and an award-winning author.
On today's show he explains why smart investors make crazy decisions (and how to exploit them).
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Alex’s website: https://alexedmans.com/
Alex’s book: https://alexedmans.com/madness/
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Today’s sources:
De Bondt, Werner F. M. and Richard Thaler, ‘Does the stock market overreact?’, Journal of Finance 40 (1985), 793–805.
Edmans, Alex, ‘Does the stock market fully value intangibles? Employee satisfaction and equity prices’, Journal of Financial Economics 101 (2011), 621–40.
Edmans, Alex, ‘The link between job satisfaction and firm value, with implications for corporate social responsibility’, Academy of Management Perspectives 26 (2012), 1–19.
Edmans, Alex, Adrian Fernandez-Perez, Alexandre Garel, and Ivan Indriawan, ‘Music sentiment and stock returns around the world’, Journal of Financial Economics 145 (2022), 234–54.
Edmans, Alex, Diego García, and Øyvind Norli, ‘Sports sentiment and stock returns’, Journal of Finance 62 (2007), 1967–98.
Kahneman, Daniel and Amos Tversky, ‘Judgment under uncertainty: heuristics and biases’, Science 185 (1974), 1124–31.
