Speculation plays a role in market fluctuations from "summary" of Business Cycles and Equilibrium by Fischer Black
Speculation can have a significant impact on market fluctuations. When people anticipate future prices, they may buy or sell assets based on their expectations. This can lead to changes in prices that do not reflect any new information about the assets themselves. Instead, these changes are driven by the beliefs and actions of market participants. In some cases, speculation can create self-fulfilling prophecies. If enough people believe that a particular asset will increase in value, they may all rush to buy it, driving up the price. This, in turn, may attract even more buyers, causing the price to rise even further. Eventually, the price may reach a level that is not supported by the underlying fundamentals of t...Similar Posts
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