When stock markets dive into a pit of despondency, the prices of shares fall fast, as they are treated less like claims on a business and more like lottery tickets. In investors’ heads, the little switch marked ‘Risk’ flicks over – and at such times, investors seem to forget company valuations to focus on anything from the oil price to politics.
When we’re worrying more more about how the Italian Prime Minister is going pay for his next bout of bunga bunga than whether Tesco can maintain its earnings record, there’s something seriously awry. Yet these are excellent times to be a contrarian investor.
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