Liquidity, Euphoria and Airpockets

Liquidity is a double edged sword as it helps manage financial obligations while artificially inflating prices.  Combine excess liquidity with euphoric investor sentiment and risk asset valuations stretch even as economic fundamentals deteriorate.  On the way up, it feels great as higher prices increases wealth. BUT, the air pockets they create cause major damage.  The air pockets lead to strong, swift and unexpected corrections leaving many investors in panic and get whipsawed.

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