Volume-Weighted Moving Averages

“If investors have private information, they may know that the price of a security, which reflects all public information available, is incorrect. As a result, these investors will trade heavily on the issue until the price reflects the valuation of the security if the private information became public.”

—Walter Sun, MIT Laboratory of Information and Decision Systems “The Relationship Between Trading Volume and Securities Prices,” 2003

When people hear a claim, they might respond in several different ways. One, they can accept the claim as truth. Two, they can investigate the claim and come to their own conclusions. (Most people intend to exercise the second option, but few actually get around to doing so.) Three, they can ignore or respect the claim without making any judgment as to its validity. Finally, they can outright reject the claim.