Is the share market going to continue rising? Will the housing bubble burst soon?
All I can say is that there are always opportunities.
Why is this? Answer. Because human nature doesn’t change. There may be newer ways of doing business to-day but the result is always the same, in that there are winners and losers out of every market movement whether it is up or down.
In investments, most people buy at the top of a market and sell at the bottom, whereas if goods are on sale at the retailers we tend to buy more when the goods are discounted even though we don’t need to buy them at all.
On the one hand we are expecting investment markets to fall but conversely we expect that retail goods will get dearer. This logic doesn’t make any sense at all!
I don’t pretend to be a psychologist but from experience whenever I hear comments about a particular market “It’s different this time!”, be it from a marketing guru or a person in the street, that sends shivers down my spine.
Our DNA is the result of millions of years of evolution and the reaction of flight or fight to a set of events is so embedded in our psyche that we don’t even realise that it is controlling markets or more specifically our reaction to marketing conditions because it is controlling us, and we are the ones who influence marketing conditions.
A chartist’s comments on a particular market accompanied by graphs and squiggly lines might look like gobbledy gook, but have you ever wondered why all markets behave in a similar fashion? It is because the charts are a plot of human reaction to particular marketing conditions.
Remember most people buy at the top of a market and sell at the bottom.
The difference between a buoyant economy and one that is struggling is a shift of people’s sentiment of only 5-10%.
• When recession hits the unemployment rate rises by as little as 3% (5% to 8%)
• A change of Government is caused by a swing in voting of as little as 3-5%
• Interest rates cause market shifts with even less movement
What do interest rates have to do with the economy? People’s reaction to investment is to compare it against what they can receive at the bank through interest payments.
So unless the return on an investment is considerably higher than it is from getting a regular interest payment, why would people bother?
Makes sense?
