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Fear rules!
There has been nothing logical about the way the stock market has been gyrating over the past several months. The psychology of crowds has taken over as fear feeds fear causing even the most resolute optimists to run for the door.
Are you caught up in the panic? Have you made any financial decisions based on the fear of impending economic doom?
A crisis of confidence in the global economy has led to the unprecedented action of the Federal Government proclaiming that it will safeguard bank deposits and European leaders coming together on a bank rescue plan.
Has this reassured you? If you are one of those who withdrew cash from a small bank or the equities market in favour of one of the ‘big four’ are you considering reversing the move?
Shares bounced back (at 1.00 PM today the ASX 200 had increased by 174 points to 4,134) after Prime Minister, Kevin Rudd announced that the government will guarantee $600-$700 billion deposits in Australian financial institutions and all borrowing by Australian banks and other deposit-taking institutions from overseas.
Yet some commentators are maintaining that human psychology is so perverse that the Federal Government’s guarantee will promote further nervousness.
I guess that’s not such an out there claim considering Mr Rudd’s announcement included the comment that “this global financial crisis has entered a new and dangerous phase” and a warning that we’re about to enter a period of slow growth and rising unemployment.
On Friday Wall Street’s fear gauge, the Chicago Board Options Exchange Volatility Index (the VIX), hit a record high as US shares plummeted.
Last week Andrew W. Lo, a professor at the Massachusetts Institute of Technology who has studied investor behaviour told the New York Times that fear is a much stronger motivational force than greed.
Mr Lo said. “The loss of $1,000 has a much bigger impact than the gain of a $1,000.”
Do you blame the media, politicians or economists for fuelling the fear factor for their own agendas?
Have you found your hand moving towards the panic button yet? If not, how have you avoided its far-reaching tentacles?
Are you caught up in the panic? Have you made any financial decisions based on the fear of impending economic doom?
A crisis of confidence in the global economy has led to the unprecedented action of the Federal Government proclaiming that it will safeguard bank deposits and European leaders coming together on a bank rescue plan.
Has this reassured you? If you are one of those who withdrew cash from a small bank or the equities market in favour of one of the ‘big four’ are you considering reversing the move?
Shares bounced back (at 1.00 PM today the ASX 200 had increased by 174 points to 4,134) after Prime Minister, Kevin Rudd announced that the government will guarantee $600-$700 billion deposits in Australian financial institutions and all borrowing by Australian banks and other deposit-taking institutions from overseas.
Yet some commentators are maintaining that human psychology is so perverse that the Federal Government’s guarantee will promote further nervousness.
I guess that’s not such an out there claim considering Mr Rudd’s announcement included the comment that “this global financial crisis has entered a new and dangerous phase” and a warning that we’re about to enter a period of slow growth and rising unemployment.
On Friday Wall Street’s fear gauge, the Chicago Board Options Exchange Volatility Index (the VIX), hit a record high as US shares plummeted.
Last week Andrew W. Lo, a professor at the Massachusetts Institute of Technology who has studied investor behaviour told the New York Times that fear is a much stronger motivational force than greed.
Mr Lo said. “The loss of $1,000 has a much bigger impact than the gain of a $1,000.”
Do you blame the media, politicians or economists for fuelling the fear factor for their own agendas?
Have you found your hand moving towards the panic button yet? If not, how have you avoided its far-reaching tentacles?
Tags: Psychology, estate, real, shares
Views: 0
Replies to This Discussion
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Permalink Reply by purplewombat on -
I do blame certain sections of the media for sensationalist reporting. I understand that people have a right to know what is going on, but using language like the stock market "plummeting" or going into "free fall" rather than "falling" or "dropping" does nothing to calm the panic of shareholders, particularly those many members of the community who do not understand the ways of the share market or how the global financial markets work, but now find themselves being whipped along in the frenzy by virtue of the fact that they are exposed to shares in their super funds. Toning down the language could make the difference between the public being concerned, and going into a blind panic. It's called responsible journalism.
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Permalink Reply by Miffy on -
I blame them for not reporting on it until it had happened!!
I refute your claim about irresponsible journalism being the problem here. Probably more the fault of greedy bankers, than poor journos reporting what transpired. We're in the midst of an unprecedented financial crisis, and it will have a long lasting effect on the global economy and all of us in many ways. It would be irresponsible to tone down the language and reeks of a 1984-esque society, where the press is controlled, and in turn so are the people. Is this what you want?
Miffy
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Permalink Reply by purplewombat on
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The question was: "Do you blame the media, politicians or economists for fuelling the fear factor for their own agendas?", not, "what or who do you blame for causing the fiasco in the first place".
I was merely offering my opinion as to which of those 3 I thought most responsible for "fuelling the fear factor". I don't think the politicians or economists have fuelled the fear. Indeed they have made valliant attempts to play it down to try to restore some rationality to the situation. That leaves the "poor journos", and we all know how much they like a good story. I did temper my criticism of the media by noting it comes from "certain sections" only. Some financial publications have been very responsible in their reporting of the unfolding events.
As a matter of interest, I became aware of the impending disaster several years ago. If you care to go to the following website and read back over the sage's enlightening and very entertaining archived commentary, you will see that virtually everything that he predicted would happen, has indeed come to pass, albeit that he was unable to put a time frame on the events due in part to the fact that the US was printing money like the Germans so many years ago, in an attempt to keep everything from going off the rails. Enjoy the read:
1. going back as far as 2004
http://www.goldsilverbullion.com/search.html
2. most recent comments
http://www.goldsilverbullion.com/BullionMarketInsights.htm#Jan1
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Permalink Reply by purplewombat on
-
The question was: "Do you blame the media, politicians or economists for fuelling the fear factor for their own agendas?", not, "what or who do you blame for causing the fiasco in the first place".
I was merely offering my opinion as to which of those 3 I thought most responsible for "fuelling the fear factor". I don't think the politicians or economists have fuelled the fear. Indeed they have made valliant attempts to play it down to try to restore some rationality to the situation. That leaves the "poor journos", and we all know how much they like a good story. I did temper my criticism of the media by noting it comes from "certain sections" only. Some financial publications have been very responsible in their reporting of the unfolding events.
As a matter of interest, I became aware of the impending disaster several years ago. If you care to go to the following website and read back over the sage's enlightening and very entertaining archived commentary, you will see that virtually everything that he predicted would happen, has indeed come to pass, albeit that he was unable to put a time frame on the events due in part to the fact that the US was printing money like the Germans so many years ago, in an attempt to keep everything from going off the rails. Enjoy the read:
1. going back as far as 2004
http://www.goldsilverbullion.com/search.html
2. most recent comments
http://www.goldsilverbullion.com/BullionMarketInsights.htm#Jan1
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