Investor sentiment changes all the time and moves in sometimes mysterious ways. There are several proxies for how this investor sentiment can be measured and we are understanding more and more how investors change their portfolios as sentiment changes. But in the spirit of markets being reflexive, these behavioural changes by investors in turn change market sentiment and create these sentiment cycles.
There's at least one area where pension funds and asset managers can't benefit from the positive sentiment they - unintentionally - caused: for over a decade they've divested from the fossil industry.
Mostly for reasons of virtue signalling or because they honestly believed such would 'speed up' the energy 'transition' (and that would signal a rather poor understanding of how the world works...). Divestment makes energy exploration more expensive and the costs are exported upstream and finally to the 6000 products we use that are made from fossil fuels. Declining supply, steady or growing demand = higher profits. Really pretty simple stuff...
The commodities needed for the energy trans must be dug up, transported and processed with fossil fuel, making the energy trans itself ever more expensive. (While the mining industry has also significantly cut exploration but for other reasons).
Yet few p funds and asset man's will benefit from the excellent prospects of energy and mining stocks since that is 'morally' not wished for...
Is this George Soros' 'reflexivity"?
There's at least one area where pension funds and asset managers can't benefit from the positive sentiment they - unintentionally - caused: for over a decade they've divested from the fossil industry.
Mostly for reasons of virtue signalling or because they honestly believed such would 'speed up' the energy 'transition' (and that would signal a rather poor understanding of how the world works...). Divestment makes energy exploration more expensive and the costs are exported upstream and finally to the 6000 products we use that are made from fossil fuels. Declining supply, steady or growing demand = higher profits. Really pretty simple stuff...
The commodities needed for the energy trans must be dug up, transported and processed with fossil fuel, making the energy trans itself ever more expensive. (While the mining industry has also significantly cut exploration but for other reasons).
Yet few p funds and asset man's will benefit from the excellent prospects of energy and mining stocks since that is 'morally' not wished for...