But the ability to short an asset more easily won’t necessarily overcome the power of investor excitement.
In 1936, John Maynard Keynes suggested why. He played down the role of quantitative analysis and probability estimates in human thinking of the assessment of ambiguous future events. People in such situations are vulnerable to a play of emotions and at times a “spontaneous urge to action” that he called “animal spirits.” He argued that much of what happens in financial markets has to do with people learning, from price movements, about each other’s animal spirits.