Research Of Overreaction In GEM Market Based On Behavior Finance

After 1970,the EMH market become mainstream finance theory foundation. After that twenty years, many studies have support efficient market theory. But in recent years, more and more empirical studies showed that market has numerous irrational behavior, the researchers learned from many of these irrational behavior research, and has formed some theory, one of the most influential is "behavioral finance", will soon mainstream economic theory and psychology or behavior from people with mental defects, trying to study the irrational behavior.This paper introduces the theory of modern mainstream finance and behavioral finance theory framework, and enumerates some of the behavioral finance theory and modern mainstream finance theory differences, effective market theory is the core of modern financial theory, and rational man hypothesis is the important prerequisite of effective market, i.e. the modern financial system is built on the premise that perfect hypothesis. Behavioral finance argues that "rational man hypothesis" conditions, and the actual harsh investment environment vary considerably, advocates "limited rationality" hypothesis. Naturally, many securities investment learns of empirical studies cannot under this premise, such as herding effect in research, if on traditional research in the theory of effective market, the stock market tumbling, especially some small savers maturity not high market (such as China a-share market) is difficult to explain jumped plunged.For our behavioral finance theory research and empirical research broadened another idea, that is, in a certain extent admit imperfect markets, negative market "effectiveness," admits market participation in the main-many investors overconfidence etc, there is a deviant behaviour, resulting in the abnormal phenomenon, this market at present analysis method to the analysis of some stocks phenomenon is particularly realistic significance.