Chapter 22: How Supply and Demand Influence Price and Vice Versa
What we will cover in this chapter
- A short-term move in prices does not change the fundamentals of a market but when prices have been rallying for a number of years, a supply response is encouraged.
- When prices have been declining for a long time, demand retreats and supply eventually responds, which creates the conditions for a new bull market.
- The impact of sentiment on prices and vice versa ensures that markets move in long-term bull and bear market cycles.
EVERY INNOVATION IN generating, transforming or saving energy creates efficiencies. These are rapidly reinvested in labour-saving devices, which in turn lead to increased consumption. This ‘rebound effect’ is ...