Decisions of Fear Wrong For Making Investments According to Article

 

Stock Market Reaction Shows that Decisions of Fear
Are Wrong for Investments

Newly developed scientifically predictable investment model shows that the recent market volatility is a result of instinctive response to fear rather than analytical response to economic indicators. The instinctive-response mode  makes investors “cut and run.” Conversely, the analytical-response mode, a.k.a. system 2, originates in the cortex and makes analytical decisions based on the economy.

The scientifically predictable model shows that the U.S. economy is strong and vibrant. Retail sales climbed 0.9% in April after an upwardly revised gain of 1.4% in March. This is a key economic indicator because consumer consumption makes up about 70% of Gross Domestic Product (GDP). Additionally, the economy added 428,000 jobs in April, for an average monthly gain of 523,000 over the past three months. The unemployment rate, at 3.6%, is near pre-pandemic level.

The instinctive-financial behavior today is the same as the behavior of our ancestors who faced uncertainty of survival from the elements and predatory animals. Although our fears today are more financially oriented, our instinctive response still originates from this part of the brain but is not suitable for investment decisions. The scientific study on the impact of money anxiety on financial decisions has been peer reviewed and published in the Journal of Applied Business and Economics.

When investors are exposed to negative news, economic, political or social, their level of money anxiety increases, which automatically generates instinctive response as part of their survival mechanism. Unfortunately, the instinctive response means “cut and run,” so they sell their stock and get out of the market. The same response our ancestors had when they saw lighting in the sky – they grabbed their food and wood and run into the cave.

The Scientifically Predictable Investing Model was designed to neutralize instinctive decisions by promoting the science of financial decisions. The model provides investors with a scientific projection of the featured equities, suggesting that investors follow the scientific projection rather than their instinctive response to sell when panicking. The Scientifically Predictable Investment Model provides peace of mind during volatile markets such as the one experienced in the last two weeks.

About Analyticom LLC
Analyticom LLC is a behavioral economics and finance firm focusing on developing predictive models for financial behavior. The company is a pioneer in developing a scientifically predictable model for the equity market based on the level of money anxiety. The Scientifically Predictable model projects the rate and return of ETF based on a predictor that is featured in the study “Dynamics of Yield Gravity and the Money Anxiety Index” and has been peer reviewed and published in the Journal of Applied Business and Economics.
Contact:

Dr. Dan Geller
Behavioral Economist
for Financial Services
Analyticom LLC
drgeller@analyticom.com
www.analyticom.com
415-891-3093