Inflation and Stocks
Every once in a while, a new company bursts on the scene and captures the imaginations—and the money—of millions of investors. Typically, that company is in a new category, like electric vehicles or online conferencing. These stocks often experience a rapid and very steep rise in price as investors pile in, and almost always then see a significant drop as the euphoria dissipates. This pattern triggers two very different but problematic behaviors in retail investors: FOMO when they buy and the Disposition Effect when they sell.
