At the end of November, we discussed how panic stock selling due to omicron might be followed by panic buying with investors wanting to get in during the stock market dip. We definitely saw exactly that last week, pushing the stock market far above the previous week’s lows. With the amount of medical uncertainty surrounding the omicron variant, I was surprised at just how strongly the market rallied. This underscores the point that when big news events occur, many investors react emotionally, generally with wild swings between fear and greed. Understanding how mass psychology affects the stock market is an important tool that can help lead to higher returns, all the while remaining cool and collected.
I anticipate the stock market will be choppy this week as additional medical data regarding omicron is released and amidst the Federal Open Market Committee’s (FOMC) policy meeting this week. In addition to Covid, inflation is on the top of everyone’s mind and the FOMC’s response to inflation may very well be a market moving event that influences the stock market for the remainder of the year.
Photo by Andrew Ling
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