Tuesday, December 18, 2007

Greed & fear

Sonja Schemmann of Schroder made a very simple but highly truthful statement recently.

"Greed drives markets higher, fear drives them lower"

Until this summer the markets were driven by greed, the global economy was was expanding, companies were buying other companies. Investors were putting their money into new areas without understanding the risks.

Result: markets reach new highs

Then this summer, problems emerge in the US banking sector, inflation rises due to high energy & food prices occurred. Consumer & business confidence falls & the markets drop.

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