"Wall Street has long liked to portray the markets as fiercely efficient, an instantaneous and dispassionate mechanism for valuing companies....But the past decade has taught us that markets can be anything but rational. So today, behaviorists rule: They tell you that investors hold losing stocks not so much because they're undervalued but because it's hard to admit defeat. They note that men tend to trade more aggressively than women....And most people buy stocks because they're going up — not because of earnings prospects.
Which is right? Both camps have good points."
The article goes on to lay out research supporting both sides. A must read for my classes! :)