As they say, in the short-run the market is a voting machine, in the long run a weighing machine. I think markets are mostly rational, but not 100% rational, and are prone to periods of mass hysteria in both directions, such as the dotcom and real estate bubbles, and the crashes of 1987 and the most recent financial crisis.
As they say, in the short-run the market is a voting machine, in the long run a weighing machine. I think markets are mostly rational, but not 100% rational, and are prone to periods of mass hysteria in both directions, such as the dotcom and real estate bubbles, and the crashes of 1987 and the most recent financial crisis.
ReplyDeleteI agree. The only problem is that markets stay crazy for a long time and it is difficult to tell when it will come back to normality.
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