Don’t underestimate animal spirits

“Animal spirits” is the term used by the British economist, John Maynard Keynes, to explain financial and buying decisions in conditions of uncertainty.

It basically describes the psychology of the market.

Positive – Everyone is buying, shares are going up.

Negative – Everyone is selling, shares are going down.

Keynes argument is that the animal spirits of the market are more important than the fundamentals.

In other words, it doesn’t matter if you have a great business, you won’t easily find investors when general market sentiment is negative.

When raising money, pay attention to the animal spirits.

They’ll be a big factor for your success than the merits of your business.

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