The Heterogeneous Beliefs of Retail-trading Investors and Capital Asset Prices Review

In China's securities market, 99% of the total investors are retail-trading investors. Retail-trading investors mainly affect shares of listed companies in considerable pathways such as the number of the retail-trading investors in the market and the ability of retail-trading investors process and learn information. Most importantly, the heterogeneous beliefs of retail-trading investors determine the optimistic and pessimistic market expectations. These can be included in the scope of the influence of the small investor heterogeneous beliefs on China's listed companies asset pricing. In the stock market of a perfectly competitive market, the number of investors influences and balances the price. However, in a stock market where the ultimate trading goal is the investor's future predicting period, the ability of investors to determine stocking price in the future ultimately determine the level of listed companies in asset pricing. Under the assumption of the retail-trading investors are irrational and ignorant investors compare to institutional investors, this article summarizes and evaluates the relationships between heterogeneous beliefs and asset pricing and the relationship between the retail-trading investors and asset pricing.