Mr. Market Miscalculates
The Memo by Howard Marks
The Market: A Reflection of Sentiment, Not Intelligence
Volatile market behavior stems from psychological factors such as skewed perception, wishful thinking, and rapid contagion of irrationality. These elements lead to extreme fluctuations in market prices, driven largely by investor sentiment rather than rational analysis. While long-term market performance reflects the underlying value of assets, short-term movements are often erratic and uninformed. Mistakenly attributing intelligence to the market can mislead investors, as it serves primarily as a gauge of collective emotions and not as a guide for sound decision-making.
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