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The following headline caught my attention over the weekend: American Stock Markets Are Surging, So Why Do Americans Feel Like It’s Still Recession?
I was hoping to open the article and read about the need for investors to understand the difference between stock markets and the economy. I was hoping to read that traders react to headlines, while long-term investors don’t. I was hoping to read that markets aren’t going to wait around until people feel better to revert to more realistic values…either up or down.
Instead, the article touches on the concept of investor confidence, suggesting at one point that it plummeted as a result of the Great Depression, but then suggests in the next paragraph that falling investor confidence actually caused the Great Recession. (more…)