Impact of Governments

In general, government policies can affect:

• interest rates and currencies;
• business and competition;
• economic cycles and inflation.

Impact of International Relations

International political developments can have large impacts on economies and investment markets.
One example of this includes the major impacts to American and global markets after the 9/11
attacks.

Speculative Fashions
They happen when investors lose sight of fundamental values and buy shares or other assets simply
because they expect prices will continue to rise. This is often known as the ‘Greater Fool Theory’, i.e.
you rely on a greater fool to purchase the shares at a higher price. Examples of speculative bubbles
include the 1999/2000 tech boom that ended in a severe bear market and the boom in banking
stocks that ended in the financial crash of 2008.

Socio-economic Impact
Aging populations in developed countries have impacts on the financial markets. Aging populations
in the Western world will boost particular sectors which cater for the elderly population such as
financial services, leisure and health-care.