I have posted Entry #487 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Emotion and Economic Developments Combine to Set Stock Prices.
Juicy Excerpt: Shiller does not deny that economic developments affect stock prices. They obviously do. What Shiller did was to add a new element to be considered. It is not only economic developments that matter. Stock prices are set by humans. Those humans are influenced by the economic developments that they see take place before their eyes. But their consideration of those economic developments takes place in a context that is not at all the same at different times. The spread of a virus could have a very different effect on stock prices if it took place at a time when valuations were low from the effect that it would have if it took place at a time when valuations were high.
feed twitter twitter facebook