Alec Cutler: The swinging pendulum of investor sentiment

Every year, one way or another, we get a lesson in humility from markets. And 2024 has served as a great reminder that the spread of potential investment outcomes is always wide. If the spread of investment outcomes is wide, so too is the sweep of the pendulum in investor sentiment. First, the pendulum starts to swing, gaining force as the stories get better, the promises grander, the assumptions rosier, and the profits more assured. As beliefs get more stretched, so do market prices in the affected areas. In time, cracks start to form in the appealing stories, and the grand promises ...