Sometimes Events Pinpoint a Sentiment Extreme

Investor mood swings from optimism to pessimism and back again. This is what gives markets their cyclical nature. These swings can occur over short durations or long ones. We just experienced a swing in the short term. The equity markets rallied strongly after the Presidential election. Once it became clear that the income tax rate cuts would come into place, we witnessed an acceleration in the price of equities. Out of nowhere, stock prices peaked in January and fell hard in early February.

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