Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Psychology Behind Your Stock Market Pessimism

Stock-Markets / Trader Psychology Mar 23, 2015 - 02:54 PM GMT

By: Investment_U


Alexander Green writes: Over the course of the last few columns - and during my recent talks at the Investment U Conference - I’ve laid out my case for viewing the future of the economy and the stock market optimistically.

Yet Editorial Director Andrew Snyder polled our readership and found that only 38% of you agree with me.

Why are so many investors pessimistic about the future?

At a recent talk I attended at the Cato Institute in Washington, D.C., Dr. Steven Pinker, the Johnstone Family Professor of Psychology at Harvard University and author of many books, including The Better Angels of Our Nature (an excellent summary of why this is the most peaceable era in our species’ history), offered several explanations.

The first and perhaps primary factor is the nature of the media, where virtually everything newsworthy is bad news. People don’t want to hear about the buildings that don’t burn, the planes that don’t crash or the surfers who aren’t bitten by sharks.

The story of the modern world is one of long-term incremental improvement. Unfortunately, that doesn’t make a terrible headline.

In addition, the world now has 1.75 billion smartphones. That means we have 1.75 billion news reporters, taking photos and videos of terrible things happening around the world in real time and immediately posting them on the Internet.

Every day there are billions of generous, humane, kind and loving acts that we never get the opportunity to see. But horrible behavior and tragic accidents we see almost instantly - and the media recycles them endlessly throughout the day.

Another reason for our fearful outlook is our own evolutionary past. We are descended from people on the plains of Africa who, when they heard a rustling in the grass, assumed it was a dangerous predator and hustled up a tree. The ones who shrugged and figured it was just the wind didn’t leave nearly as many descendants.

We are hard-wired to be hypersensitive to danger and risk.

For example, Pinker suggested that attendees ask ourselves how many really good things could happen to us today after we left the conference. He told us to let our imaginations run wild.

Then he asked a different question. How many bad things could happen to you today? We all agreed the list was far longer and more dramatic.

As another thought experiment, he asked us to imagine how much better we could feel than we are feeling at that moment. Then he asked us to imagine how much worse we could feel.

You could practically feel the audience begin to recoil.

And that’s the whole point. We feel pain much more acutely than pleasure. We also feel loss much more acutely than gain.

For example, imagine that you have just locked in a $10,000 return in the stock market. How good do you feel?

Now, imagine you have just realized a $10,000 loss. Just the thought is enough to make you feel somewhat sad, angry, foolish or ashamed. This fear of loss is what keeps so many from ever risking anything in the stock market, even though the risk of long-term loss is far less than the danger of short-term fluctuations.

Pinker also mentioned a factor behind our pessimism that I’d never considered: the psychology of moralization.

People compete for moral authority - for who gets to be considered more noble - and pessimists are generally seen as more morally engaged than optimists. Individuals who ruminate about negative developments - climate change, income inequality, the erosion of the family, the growth of the federal debt - appear more morally engaged than optimists who seem apathetic.

Both good and bad trends are always underway, of course. But the objective truth is that most things are getting better for most of us.

Human beings have never lived longer. Standards of living have never been higher. Educational attainment has never been greater. A higher percentage of the world population is at peace than ever before. Violent crime is in a long-term cycle of decline. U.S. household net worth is at an all-time high. And financial markets - which look forward not back - are optimistic about the U.S. economy, the U.S. dollar and U.S. corporate profits.

So if you believe the world is going downhill, it’s worth taking a moment to consider whether the problem is truly the state of the world... or simply the way you’re looking at it.

Good investing,



Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email:

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules