Chrysler, Pessimism and the Stock Market

I had someone email me a variant on this thought this morning, so I thought I’d share it here. Market participants aren’t to be trusted at times like this because they’re watching their world come down around them, and it makes them prone to extremes of pessimism. Imagine if stock markets were run by soon-to-be ex-Chrysler employees and you begin to see the inherent bias in the system.

I’m not saying the current economic pessimism is unwarranted, because it is. But I am saying it’s worth reminding yourself why we see some of the extremes of sentiment that we do.

Related posts:

  1. Central Bank Chairs, Fed Futures, Assassinations, and Rational Pessimism
  2. Hug a Stock Market Bubble Today
  3. Siegel vs. Arnott: The Stock Market Debate
  4. Can’t Keep the U.S. Stock Market Down
  5. Fat Tails in the Stock Market