Turn and face the future
By Gordon Powers, Sympatico / MSN Finance
Interesting article about what makes investors tick from MorningstarAdvisor , a U.S. publication that offers practice management and business building advice to financial advisors.
For months now, people have been abandoning stocks in a kind of slow-motion crash that reveals growing apprehension about what is likely to be a long and deep recession. In short, they're running scared.
To understand why you have to look at how the "physiology of fear" affects investors, says Deborah Price, founder of the Money Coaching Institute.
The more people listen to the news and replay all the negative information, the more fearful they become. The barrage of bad news triggers the amygdala -- that's the part of the brain that stimulates the fight, flight or freeze response. And that's where they get into trouble.
People can tolerate this fear, however, if they're fairly sure the situation is going to end within a specific time frame. That's how most of us handle roller coasters. We ride them because, on some level, we have a sense of trust and we know the ride is going to end.
Clearly, no one can be sure when this current market situation is going to turn, but we do know that -- historically -- U.S. recessions have averaged somewhere between eight and 16 months. And we also know that the stock market is a discounting mechanism which historically bottoms well before the end of a recession.
There, feel better?
Posted by: Guerino | Dec 22, 2021 3:42:55 PM
While we are in a downturn there are parts of the country that were in a downturn way before the recession happen. Maybe the government should look to these communities to see how they survived and maybe they can apply some of these techniques to the bigger centres. Why are the economies in such cities as Prince George, Kamloops, Saskatoon, Thunder Bay, and Saint John holding steady. Why is there a demand for jobs? You never hear of these cities in the news.
Posted by: polkaroo | Dec 23, 2021 12:10:40 AM
The Japanese economy went through something similar in the early 90's. Their government reduced interest rates to near zero to try and stimulate growth. . . same as what's happening here right now. Anyways, their economy was pretty flat for 15 years. It was just starting to turn the corner when this recent global downturn hit. That's right folks, we could be in for something similar. Nevermind a few quarters of negative or stagnant growth. We could be in for a doozy of a recession.
Posted by: Big M | Dec 29, 2021 1:31:29 AM
Prince George and Saskatoon were late to the housing boom party, and suffered incredible exports of talent in the previous years leaving a lack of local workers when things picked up. And Kamloops? I lived there for 9 years, and this is definately another city late to the housing/growth party (compare it to Kelowna). Track the real estate price trends in every city that you mention, they all had moderate housing increases in comparison to the baseline, so, although I think your observation could have some merit in regard to their local economies, I believe their current state was caused by their being late in the wave of the housing market explosion and the people there did not get as caught up in the craziness. It was real estate increases that fueled almost this entire worldwide boom cycle that is now imploding as prices come back to reality and we all realize together , contrary to to the Scotia Bank motto, "we are NOT richer than we think". It was only wealth on paper, and just like the demand cycle that drives the prices up, it quickly evaporates when everyone decides to make their withdrawls.