This paper investigates how investor sentiment affects stock market returns and evaluates the predictability power of sentiment indices on U.S. and EU stock market returns. As regards the American example, evidence shows that investor sentiment indices have an economic and statistical...

We have investigated the influence of investors' expectation of future market trends on their trading and investment decisions in various market states. The efficiency of mutual-fund markets can be threatened by systematic biases in different decision-makings. Mutual-fund investors exhibit the...

We analyse a long panel of households' stock market beliefs to gain insights into the nature of their expectations formation processes. We classify respondents into one of five groups based on their data and estimate group-wise models of expectations formation. Two of the groups are at opposite...