If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?
In: Economics
You are correct. Many people don’t realize that the stock price is determined by whether people are buying or selling it. If everyone says sale, the price will drop regardless of any fundamental flaw or issue with the company. We assume that people’s actions will accurately reflect the value of the company, but often that is not true and can be influenced by outside factors, such as the news, other event, or perception. People can be irrational.
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