Pandora shares soar in first day of trading - Yahoo! Finance

Pandora shares soar in first day of trading - Yahoo! Finance:

"The shares of popular but unprofitable Internet radio service Pandora Media Inc. soared more than 50 percent in its market debut Wednesday.

Its shares opened at $20 a share and rose as high as $26 in early trading on Wednesday, up from its offering price of $16. At its high, that valued Pandora at $4.2 billion."

Gains to Merging Firms and Their Rivals: Evidence from Canada by Jean-Yves Filbien, Maher Kooli :: SSRN

Gains to Merging Firms and Their Rivals: Evidence from Canada by Jean-Yves Filbien, Maher Kooli :: SSRN:

Filbien and Kooli find (not surprisingly) that takeovers are bad for the pother firms in the industry.

"We examine the wealth creation for acquiring and target firms' shareholders to Canadian merger and acquisition announcements. We also investigate the potential determinants of the stock market reactions. Further, we explore the impact of these announcements on the gains of the target firms' rivals. Takeovers are beneficial to the shareholders of merging firms. However, we show that Canadian rival firms lose abnormal returns"

When Overconfident Traders Meet Feedback Traders by Laurent Germain, Fabrice Rousseau, Herve Boco :: SSRN

When Overconfident Traders Meet Feedback Traders by Laurent Germain, Fabrice Rousseau, Herve Boco :: SSRN:

An interesting follow up to the idea that herding is not good for markets.

"...model in which overconfident market participants and rational speculators trade against trend-chasers. We show that the growth and the burst of a financial bubble stem from positive feedback trading. However, the presence of overconfident traders and the risk aversion of the informed speculators enhance the strength of bubbles (creation and burst). The positive feedback trading enhances the negative serial correlation of prices and the volatility of prices. We show that positive feedback traders destabilize prices more than their overconfident opponents. Generally, overconfidence increases the volatility of prices and worsens the market efficiency."

Herding is detrimental in the world of investment - The Irish Times - Fri, May 27, 2011

Herding is detrimental in the world of investment - The Irish Times - Fri, May 27, 2011:

"Herding, which in a biological sense is the tendency for some species to seek safety in numbers, is easy to understand from an evolutionary perspective. Being part of a group and taking cues from others reduced the risk of falling prey to a predator on the Serengeti for example, whilst simultaneously increasing the odds of a successful hunt for meat. Furthermore, imitation of others was a successful strategy that enabled the rapid transmission of good ideas throughout a group of humans, while monitoring the actions of others also yielded important information about resource availability and mating potential.

However, though herding proved beneficial to our ancestors in the African savannah, the same behaviour typically proves detrimental in the investment world. The human instinct to imitate others can lead to the mispricing of assets as individual investors base their decisions on expert opinion and slavishly make investments simply because the experts expect the uptrend to persist."