Study on irrational behavior of retail investors in the post-COVID-19 market boom

Abstract

Against the backdrop of the COVID-19 pandemic's global economic impact, the subsequent market boom has drawn significant attention, with retail investors demonstrating remarkable activity during this period. Grounded in behavioral finance theory, this study employs literature review, data analysis, case studies, and comparative analysis to investigate irrational decision-making patterns among retail investors during the post-pandemic market rally. The findings reveal that retail investors frequently exhibit herd behavior, chasing "internet-famous stocks" and speculative assets. Social media amplifies overconfidence and "fear of missing out" mentality, leading to short-term price surges and high volatility. These behavioral biases explain price distortions and rapid emotional shifts. The research provides crucial insights for investors to improve decision-making quality and for regulators to promote stable market development.