The cycle of market emotions
Feelings. Nothing more than feelings. That about sums up the
stock market on any trading day.
Investment return and risk are joined at the gut. No pain, no gain, and,
above all, no free lunch. Ideally we’d all approach investing with a
cool hand and a
poker face. But people being people, emotions get in our way — especially
when real money is at stake and headlines and talking heads scream “buy” or
“sell.”
There’s no escaping the cycle of market emotions — that roller-coaster ride
from optimism to despair and back. But understanding where we are on this track
can keep you from going off the rails and
even lead to
well-timed gains. Sentiment charts are popular on Wall Street -- passed
around to spur debate about where stocks might be headed next. Here’s a look at
ways to decipher the market’s moods.
— Jonathan Burton
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