How to Predict Whether Market Turmoil is Underway

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It is very rare for anyone to escape the stock market crash fear. It is everywhere around the global space. It is hence pertinent for everyone to be factual and eschew emotions while investing. There are two prices that are very vital for any investor to know. They are the current price of the investment he or she owns or plans to own and its future selling price.

In line with this fact, the investors are keenly reviewing past pricing history and make use of it to influence their future investment decisions. There are some investors that won’t purchase a stock or index that has risen too sharply. They usually assume it is due for a correction. Some other investors avoid a falling stock because they fear it will continue to worsen.

Can we say these nature of predictions are factual and acceptable based on recent pricing? This article will help reveal four different views of the market and learn more about the associated academic research that supports each view. The conclusion will give you more insight about how the market functions and perhaps erase some of their biases.

4 Key Ways to Predict Market Performance

Momentum

There is a strong quote meant for all investors and it is called “Don’t fight the tape”. Investors are enjoined not to get in the way of market trends. The natural assumption is that the best bet about market movements will often continue in the same direction. This concept is induced in behavioral finance. There are numerous stocks to choose, so why should investors put their money in a stock that is falling instead of the one that is rising? It is just a classic fear and greed that can cause it.

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