HOW DO INVESTOR’S EXPECTATIONS AND EMOTIONS DRIVE FINANCIAL ASSET PRICES IN TIMES OF CRISES AND UNCERTAINTY: THE ANALYSIS OF EXPERTS’ OPINIONS

Abstract

This paper analyses the main views of several experts (academics and professionals) who met at the 2nd IEAP (Investor’s Emotions and Asset Price) meeting that was organized at the IAE Lille University School of Management on the 1st Februrary 2023. In particular, we analyze, first, the dynamics of financial asset prices as well as commodities prices during the last decade and we provide some projections about the future. Second, we discuss the role played by investors’ emotions as well as sentiment in driving financial asset prices and the contribution of fundamental factors while distinguishing financial markets from commodities and cryptocurrencies. Third, we document the dynamics of financial asset prices in the context of uncertainty, geopolitical tensions, post-COVID-19 period and high inflation. Finally, we provide some suggestions about the further extension of usual financial asset price models to include behavioral factors (emotions, sentiment) as well as uncertainty.
JEL Classification: G10, G12, G41.