Markets

How global markets reacted during recent pandemics

A Covid-induced recession globally and a faltering economy back home could well mean that a secular revival in equities is out of question

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In his book Alchemy of Finance, Hungarian billionaire investor George Soros puts forth an interesting concept called the ‘Theory of Reflexivity’. According to this theory, markets are reflexive. So, the beliefs held by investors tend to affect the fundamentals of the market and vice-versa. This reflexive mechanism forms a powerful feedback loop which can cause positive or negative outcomes, depending upon the herd or the collective thinking.