Psychologists have uncovered a fascinating phenomenon about people at the racetrack. The moment after placing their bet on a horse they become much more confident of their horse’s chances of winning than they were immediately before placing their bet. Is it possible that the very same thing happens the moment we invest in a stock or a mutual fund?
In nine of the last ten trading days the S&P 500 index has increased. While two weeks is not a market trend, as the market is random in the short-term, it surely makes people feel better. On the anecdotal side, my conversations with clients, friends, and business associates have unanimously confirmed a growing optimism about the economy. Government statistics remain mixed, but are showing signs of improvement.