Bull Market Psychology

In bullmarkets, optimism builds around the things that are doing spectacularly well. The impact is strongest when the upswing arises from a particularly depressed base in terms of psychology. High returns reinforce belief in the new, the unlikely and the optimistic. These influences cool eventually after they and prices have reached unsustainable levels. Elevated markets are vulnerable to exogenous events like russia's invasion of ukraine. The assets that rose the most, and the investors who overweighted them often experience painful reversals.