The overall attitude of investors toward a particular security or larger financial market. Market sentiment is also called “investor sentiment” and is not always based on fundamentals.
In our daily, busy lives the newspaper updates us and keeps us informed with news from around the globe. But sometimes this news is so sensationalized that people get emotional about their investments and make all their decisions based on ‘Sentimental Values’ for example if one notices that a colleague or friend is liquidating his portfolio they will do the same. One should rather look at empirical data and do some research about a particular funds past data before making a decision about their portfolio. Decisions based on pure sentimental terms usually turn out to be rash and are not the most profitable for oneself.
Thinking man advice:
- Apply Fundamentals for longer term holdings.
- Do not let certain news let you down or make you lose faith in funds that have been giving good returns to you in the past.
- Do not jump on a bandwagon, it will take some courage but if you are fundamentally correct you may reap the benefits.
