Who says share investors are rational? I mean, beyond a handful of Nobel for economics winners (Merton & Scholes, Akerlof et co.).
Today’s US technology shares were rattled by two tweets from President Trump. No numbers mentioned, only acid comments on China – and the own-elected FED Chairman. The technology shares plunged immediately an average of -2,5%, whilst other US indices went down:
Was this because investors were dropping shares hearing the bad news about the ongoing war trade with China? Or because China itself retaliated this week with $75 billion in tariffs?
My take is that the investment funds’ algorhitms are programmed to react fast to news – rationality does not pay in a downards market. What do you think?