Chris Dillow 

Weak sentiment, high returns

Chris Dillow

Chris Dillow
Weak sentiment, high returns

Investor sentiment matters. If this is low, shares are likely to rise in the following months for two reasons. One is that low sentiment means that more bad news is discounted than good, which means that average luck – a mix of good and bad news – should raise prices. The other is simply that we rarely remain depressed or euphoric for very long. Sentiment eventually mean-reverts, and as sentiment improves prices should rise.

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