Saturday, April 4, 2009

FEAR & GREED

FEAR & GREED
SUPPLY & DEMAND
ILLIQUIDITY & LIQUIDITY

Fear = Illiquidity = Supply of assets for sale

Greed = Liquidity = Demand
These equations explain what has been happening in the world of business from time immemorial. This what explains the recent about 20% increase in global stock indices. Though there has been some marginal decrease in the decline of global economy, particularly U.S. economy, the upside in the indices is explained by the increasing stock prices making the people just a bit greedy and hence the consequent increase in liquidity.

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