Gemeinsames Audio

The standard finance response to irrational trading is arbitrage. If uninformed or sentiment-driven investors push a share price above its fundamental value, rational traders should sell or short the asset. If noise traders push a price below fundamental value, rational traders should buy it. In theory, this trading pressure restores the price to a level justified by fundamentals. This is why standard finance tends to treat irrational investors as a limited problem rather than a central threat t