Question

If the amount of overconfidence among investors increases, do you expect there to be an increase or decrease in momentum?

Answer 1

If overconfidence among investors increases the asset which is mostly hold by overconfident investors experience greater momentum than assets hold by less confident investors

For example when there is a bad news about an asset overconfident investors will see it as an buying opportunity which makes asset overpriced which means there will be an sharp fall for example the case of Bitcoin after 2017 December the sharp fall of it is an example of overconfident investors