Pricing the Future (opens in new tab)

THE WAY INVESTORS think about the stock market may be entirely wrong. Intuition tells us, and academic research confirms, that a company’s stock price should respond to important news and information. When a company announces a new product, for example, its stock should go up. And when results fall short of expectations, it should decline. But a new paper titled “The Inefficient Pricing of News” calls this idea into question. The authors found that investors respond much more slowly and incon...