Financially Speaking Blog

Can You Feel It?

Published on August 27, 2015

Notice the different reactions on the faces of people riding a roller coaster. Behavioral economists tell us that investors feel the pain of loss about three times more than we enjoy the gain. It is just being human.The benefit of this area of research in psychology and finance is information that we can use to manage our emotions during times of financial stress. This information doesn't make us feel differently, but it helps us manage or cope with during stressful time.

Monday's stock market was very scary.  We should expect to have an emotional reaction. But yesterday's record-setting stock market simply didn't feel as good as Monday's market made us feel bad.

The Wall St. Journal reported this week that "sharp drops in the market transfix our attention, with short-term losses over shadowing our awareness of longer-term gains." It is what humans do.

Often we use the roller coaster as an analogy for the stock market. It is probably not a good analogy.  At the end of the roller coaster ride, you find yourself at the bottom. Eventually, the stock market ends on top.

Tags: stock market volatility

« Back to Blog

Archives

Tags

401(k) plans A consumer debt; economic trends correction don't panic economy financial advice; fiduciary herd mentality; investment decisions making historic interest rate risk; bond investors; investments interest rates investing Investing 101 investing judgement investment decisions investment decisions; investors emotions; investor fear; investment management investment risk investments; foreign stock investing; financial media investor behavior investor fear living will; end of life; advance directives market timing; investment philosophy; wealth management Retirement at age 65; lifetime funds; target date funds risk tolerance stock market stock market predictions top of the market volatility wage growth

RSS Feed

Subscribe by Email

Enter your email address:

Delivered by FeedBurner

Sign Up for Our E-News

* indicates required