Are financial markets flying from reality?

flightfinance

The Psychodynamics of the Stock Market

We think of stock market as an indicator of economic activity. But it is also an indicator of the emotions associating with investing, and more broadly with our shared images of the future. If the market signals our collective “greed and fear, these feelings only highlight that our experience of an unknowable future leaves us vulnerable to primitive emotions. This was the basis after all for Allan Greenspan’s, the chair of the Federal Reserve Bank, famous speech in which he worried that the stock market, responding to the dotcom boom of the 1990s, was expressing “irrational exuberance.” If we take this point of view, one presenting question is what emotional meanings can we glean from the stock market today? What might it tell us more broadly about the emotional current that underlies our hopes and fears about the future, not just of the market or the economy, but also of society more broadly? ….[READ]

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