Shiller: The Stock Market Is Intrinsically Psychological
Nothing new here in a Sunday New York Times piece by Robert Shiller, “An Echo Chamber of Boom and Bust”, but it’s always worth remembering that the stock market is people:
THE global signs of a recovery in economic confidence seem puzzling.
What happened? Economic analysts often turn to indicators like employment, housing starts or retail sales as causes of a recovery, when in fact they are merely symptoms. For a fuller explanation, look beyond the traditional economic links and think of the world economy as driven by social epidemics, contagion of ideas and huge feedback loops that gradually change world views. These social epidemics can travel as swiftly as swine flu: both spread from person to person and can reach every corner of the world in short order.
(Via BeSpoke Investment Group)