Machine Learning

Stock prices are based on the beliefs of the market and, in turn, affect the beliefs of the market If the market believes that a stock is overpriced, then the price will decline until such beliefs are no longer expressed Such beliefs are based on the fundamentals and the perceptions of investors The fundamentals are the facts about a business and its prospects that are publicly available The perceptions are the opinions of investors about the facts, about the current economic environment and about what will happen next This perception is often influenced by the price of the security For example, if the price of a stock is rising, then more investors will tend to believe that the fundamentals are good This will cause the price to continue to rise The Market€™s Beliefs The market€™s belief about a security may be based on the fundamentals or on the perceptions of the investors The following two examples illustrate how these beliefs affect stock prices Example 1: Demand for a Product Increases Sup