Report
Financial markets: The disappearance of fundamentalists during crises
A fundamentalist is a financial market participant who has a fundamental view of the value of financial assets (even if this view is wrong). They buy when the price of the asset is lower than this fundamental value; if the opposite is true, they sell. An asset’s fundamental value can be revised in the event of unexpected shocks, but this is uncommon: absent such shocks, share prices evolve steadily in a market of fundamentalists . What we have seen since the start of the coronavirus crisis is considerable daily volatility in share prices and in credit spreads: this high-frequency high volatility is incompatible with a market of fundamentalists. Financial markets are therefore currently dominated by non-fundamentalist participants who overreact to daily news.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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