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Crisis of Confidence

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Crisis

Crisis of Confidence occur when investors lose confidence in the past assumptions they had about the asset in questions performance

  • A Crisis of Confidence usually causes prince to overshoot on the downside, thus creating a buying opportunity
  • An increasing drop in investing due-diligence usually forbears a confidence crisis
  • Examples of this include:
    • Reduction in loan covenants
    • Falling interest rates
    • Focus on stories and growth vs. valuation and fundamentals

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