Gauging Investor Sentiment – Should You Care How Investors Feel?
You may have read that it is important to leave emotions out of your investment decisions. Over the years, various studies have attempted to measure the deleterious effects of letting emotions play too great a role in financial decision making. However, there is an advantage to be gained by trying to interpret the emotions of investors in general. Specifically, the ability to detect bullish or bearish investor sentiment can be useful when making decisions about your portfolio. Technical analysis, the evaluation of securities based on historical prices and other trading variables, is based in part on market psychology and thus…