We are loss aversive that we weight losses greater than gains. However, we are not pessimist in the market. Everyone knows there will be a recession ahead, it is just the nature. Being a pessimist means people in the market will have no incentives to make any move in the market. As we can see this is definitely not true. My opinion is that people are pessimist for immediate changes and optimists for the long term. Negative information may cause panic in the short term, but in the long term, people’s behaviour will not be affected.
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