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Investments glossary

Negative Feedback


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Quotes of the day:

Everyone can get the gold of the Sun. (Tout le monde cueille l\'or du soleil)

— Charles de LEUSSE

Negative feedback in financial markets comes from a pattern of contrarian investment behavior. An investor using a negative feedback strategy would buy stocks when prices decline and sell stocks when prices rise, which is the opposite of what most people do. Negative feedback helps make markets less volatile. Its opposite is positive feedback, in which a herd mentality pushes elevated prices higher and depressed prices lower.


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