The criticism of Fame in comparison with the new research1. IntroductionOver the last two decades there has been debate as to whether or not behavioral aspects exist in finance. This means that financial markets are subject to different investor sentiments and that markets are not efficient, i.e. the Efficient Market Hypothesis (EMH) is not valid. EMH proponents argue that all available information is included in stock prices, meaning that any long-term abnormal returns achieved are a matter of luck. On the other hand, proponents of behavioral finance argue that due to investors over- or under-reacting to information, it takes time for prices to fully adjust and thus there is an opportunity to earn abnormal returns for a long time. term. Fama published a famous critique of long-term yield anomalies. He deduced that all the anomalies reported up until then in scientific articles were a matter of chance. According to him, it is easy to show the weaknesses of behavioral models and prove anomalies. If there is a more or less even split between overreaction and underreaction, and continuation and reversal of returns, then this supports the market efficiency hypothesis that any abnormal returns are random. He further deduces that with a reasonable change in the methodology used, the anomalies are significantly reduced or disappear completely. In the years since the publication of his critique there have been many articles that contradict Fama's view and lend support to the behavioral side of finance, stating that the EMH is invalid for financial markets due to over- and under-reaction by investors due to overconfidence. In this essay I will take a closer look at two articles that focus on how investors' different reactions to information increase trading volume in the market (Odean, 1998) and which stocks are traded (Barber and Odean, 2007). Both find evidence that investors' overreaction to certain information affects their trading and therefore the market. This contradicts the theory of an efficient market in which all market reactions are rational. I will first present a brief theory on the efficient market hypothesis and behavioral finance. Next I will provide an overview of the criticism of Fama (1998). In the next section I will present the main points of the articles by Odean (1998) and Barber and Odean (2007). These are then compared with the relevant Fama conclusions.2.