Ep. 42: The Happy Passenger with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
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The Importance of Feedback Loops in the Stock Market
In a Wall Street Journal article, Robert Schiller says momentum is the tendency for prices to keep moving in the same direction. The housing market though, it's a proven reliable predictor of where prices will go in the future because of what Schiller calls feedback loops. When someone makes a lot of money off a home price increase, his friends hear about it and they decide their chances of buying a home have gone up. This leads to further price increases and more success stories and the loop continues.
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