Emotional Response in Investment Decision Making & Sentiment for Apple Inc. Stock

Abstract

The reactions of investors to both good and bad news when it comes to the stock market are very diverse. Most professional investors will argue that their reactions to the stock market rises and falls are based on calculated and scientific investment strategies. There are even investors who choose to make investment choices based on computer programs or newly developed artificial intelligence (AI) algorithms to make decisions with regards to the price of stocks and the specific market futures. In reality this is not the case at all. While there are some investors who can leave their emotions at the door, the majority are making their decisions based on emotional responses to the ebbs and flows of stock prices. It does not matter if the information coming out of the stock market is good or bad, the reactions to it is often emotional. Fear, panic, worry, over-confidence, exuberance, and greed will cause an effect on both stock prices and valuations. Investing is a man-made ecosystem; it does not exist in nature. All humans are emotional at their core, therefore their emotional reactions to natural disasters, pandemics, presidential elections, and other political matters will affect their decision to buy or sell.