01135nas a2200169   4500008004100000245002200041210002200063260000900085300001000094490000700104520072700111653001200838100001700850700001800867710001800885856006200903       2015                        eng d00aSentiment Bubbles0 aSentiment Bubbles  c2015  a59-740 v233 aWe examine cumulative changes in investor sentiment and find that these changes relate to extended periods of increasing overvaluation, followed by price corrections. The relation between sentiment and returns is path dependent—short-term increases in sentiment precede strong positive returns, while prolonged periods of increasing sentiment precede negative returns. Positive short-run returns are consistent with bubble dynamics and mitigate the backwards induction conundrum described by Abreu and Brunnermeier (2003). Our results hold for the market portfolio, and are especially strong for opaque portfolios with high levels of uncertainty, as well as portfolios with greater market frictions that limit arbitrage.10aFinance1 aBerger, Dave1 aTurtle, Harry1 aEmptyAuthNode  u/biblio/sentiment-bubbles