Expectations determine market outcomes from "summary" of Why Stock Markets Crash by Didier Sornette
The driving force behind market outcomes is the collective expectations of market participants. These expectations are influenced by a myriad of factors, from economic data to geopolitical events to psychological biases. When individuals are optimistic about the future prospects of a particular asset, they are more likely to buy, driving up its price. Conversely, when pessimism takes hold, selling pressure can lead to a decline in value. Market outcomes are not determined by rationality alone, but by the interplay of emotions and beliefs. This can lead to feedback loops, where rising prices fuel further optimism, and falling prices breed more fear and panic. In this way, the market becomes a self-reinforcing system, with expectations shaping reality to a large exten...
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