Skittish Market

AAA

DEFINITION of 'Skittish Market'

An investment climate marked by skeptical investor behavior. A skittish market might occur following a significant downturn, when the market appears to have recovered but investors remain fearful and hesitant to buy in because they either don't believe that economic conditions have really improved or because they are afraid of the next downturn and want to avoid it by staying out of the market.

INVESTOPEDIA EXPLAINS 'Skittish Market'

Investors who get carried away by current market conditions and allow their emotions to influence their behavior more than the numbers tend to act irrationally and against their best interests. To overcome the tendency to buy when the market is up and sell when it's down, successful investors like Warren Buffett recommend choosing stocks that are momentarily underpriced compared to the underlying value of the company and holding those investments for the long term.



RELATED TERMS
  1. Bull Position

    A long position in a financial security, such as a stock in the ...
  2. Sucker Rally

    A temporary rise in a specific stock or the market as a whole. ...
  3. Herd Instinct

    A mentality characterized by a lack of individual decision-making ...
  4. Lemming

    The act of an investor following the crowd into an investment, ...
  5. Rally

    A period of sustained increases in the prices of stocks, bonds ...
  6. Outcome Bias

    A decision based on the outcome of previous events without regard ...
Related Articles
  1. An Introduction To Behavioral Finance
    Active Trading Fundamentals

    An Introduction To Behavioral Finance

  2. Tips For Investors In Volatile Markets
    Investing

    Tips For Investors In Volatile Markets

  3. How To Avoid Emotional Investing
    Trading Strategies

    How To Avoid Emotional Investing

  4. Market Problems? Blame Investors
    Options & Futures

    Market Problems? Blame Investors

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center