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WARNING: If you think this is noise then please DELETE NOW!!!!
A lot of what I'm going to copy came from, Forbes Magazine, May 15, 2000
issue.
Page 180
" The Journal of Psychology and Financial Markets, the first academic
journal devoted to investor psychology, warns in its March debut issue:
" People do not behave as gas molecules," namely as independent actors
making individually random movements that are collectively predictable.
No, investors act more like herds of agitated animals."
Another concern is how will investors act, the ones that didn't
experience the 1973-1974 crash??
This part of the article I disagree with:
They buy on dips. That explains the quick recovery from the August 1998
spill. ---I disagree with this, for that, the Fed. Lowered interest
rates which created the big boom and to try and save the President of
the US during the impeachment process. IMO.
" But what if stocks fell 50% and sat there for three years?"
Page 181
" Here's another market-psych term: recency. That is, the investing
public has no historical sense and pays attention only to the most
recent events. Remember yestarday's 5% advance? Yeah, let's do it
again. Remember the 1997-98 Asia meltdown? Uh, no.
This next part is talking about Dr. Richard Geist, a former Harvard Med.
Sch. psychology faculty member. Is now helping Money managers identify
emotional issues.
He talks about one money manager, how she bought ABC @ $20, watched it
go up to $30. Then the company issues an announcement and the stock is
in the teens.
" Why? Says Geist: " One of the emotional convictions she followed is
that when something good happens, something bad is sure to follow."
Since the stock had briefly shot up, making her feel good, she
subconsciously expected the fall, and felt she deserved it.
Fortunately, after her session with Geist, she held onto the stock and
it rose again."
I'm glad that I don't have this Dr. or money manager on my payroll.
TradeWell,
Joe Frabosilio
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