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Monday, 5 February 2018

On The Importance Of Investor Confidence

 The state of mind and views of market participants are tremendously important for stock market prices for two primary reasons. Firstly, “confidence” in the markets and the economy play an important balancing effect in counteracting the ever-existing imbalances that gradually build up during monetary expansion. “Sufficient” levels of confidence might hence serve to delay inevitable market corrections. Secondly, shifts in investor psychology and expectations can alter market developments, especially stock prices, noticeably quicker than most fundamentals can. 

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