Investor Behavior: A Tragic Love Story
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Investors are a fickle bunch.
They love owning stocks when the market goes up. No surprise there. It feels great! So great, in fact, that pesky details like nosebleed valuations or a lack of profitability are easily overlooked.
But the romance never lasts.
Or does it?
The American Association of Individual Investors (AAII) takes a weekly survey of investor sentiment. It recently reported that optimism about the stock market dipped below 20%. That’s the fourth dip below the 20% mark in the last seven weeks.
To put that in perspective, the survey never dropped below 20% during the entire COVID-19 market crash of 2020! I’m talking about before we had any idea when a vaccine would be ready. That was when protestors filling the streets, rioters clashing with police, and the toppling of historic monuments were a part of daily life.