Small Stocks and Value Stocks

Part 1: There is evidence that small stocks and value stocks perform better over the long term than the market averages. What are some logical reasons for this phenomenon? Part 2: There is strong evidence that many investors suffer from familiarity bias and overconfidence bias. Can you explain why these biases might exist? Can you think of a situation in which you might make these mistakes (if you hadn’t learned about these biases in this module)? Include some news that is less than a year old that is applicable to this discussion.