U.S. Stocks Remain Sharply Lower After Initial Nosedive

Automatic TRANSCRIPT

So look first of all stocks go down too granted not always so much so fast but also they have been going up for a very long time. Now and the cove in nineteen news is alarming. But there's context to be ahead here right so we are going to do what we did yesterday. Which is to say. We're going to get Andrea is felt on the phone. She is a professor of finance at the Anderson School out at Ucla. Thanks for coming on again. Thanks for having me so we talked yesterday. as I mentioned Yorkshire Your Gut reaction was. Oh no yesterday as you watched today unfold. A more considered thought. Yeah I watched today and I thought you I think people have been looking for good news for so long. They're still looking for good news but they're reevaluating fundamentals and actually think that's a good thing we had tax cuts. We've had low interest rates. We've had a strong consumer sector. But we want to make sure we're looking at fundamentals in trading based on sentiments. So I think this I think the reevaluation of fundamentals is is a good thing for markets. It's a little painful though. It is a little painful. Yeah at a personal level. It's painful but I think we have to abstract from the personal pain and really look at it as scientists you know we want our as prices to reflect fundamentals so we actually should be happy when we feel like markets are acting rationally. We might have a little bit of an overreaction here we have to see yet how much pain we have to go through with the with the corona virus and it's it's ultimately implications but at the same time. I think we don't WanNA trade on unhappiness and positive sentiment alone fair enough but that said though. I'm going to do a quick behavioral economics thing here with you know how when the stock market goes up. There's this thing called the wealth effect and everybody pretty much feels better because Oh look the stock. Market's up What do you suppose it bodes for consumer confidence in this economy which we say all the time is so critical when something like this happens? Yeah I th I do think that there. There's certainly a negative wealth effect. We have to remember that you know less than half of the American population actually own stock but those wealthy people do have a large impact on the economy. And I do think that they will be feeling a little bit less wealthy after these last two days. You busy about this time tomorrow. If we need you I would love to Talk Tomorrow K. Andrea is felt as a presser of finance at the Anderson School at Ucla across town professor. Thanks for your time I really appreciate. It was great to be

Coming up next