Since the stock market collapse of 2007, investors seem to have lost their equilibrium. The days of risk-taking tendencies exhibited by high sensation seekers seem to be over. Investors appear more wary, less optimistic and certainly less financially secure. How have these emotions impacted investing philosophies? There are those who believe that cognitive ability and personality traits can predict economic outcomes especially with regard to investing.
Cognitive ability relates to understanding complex ideas, adapting to change and learning from experience and is often coupled with personality traits (both positive and negative). The results, depending on the traits (such risk-aversion or over-confidence), may yield a solid portfolio or one on the brink of financial ruin. When it comes to financial markets these days, not all investors are capable of judging adequately, making sound financial decisions or evaluating the consequences of their actions. In some cases, highly intelligent investors capable of grasping risks still forge ahead because they are more driven by impulsive or conscientious behaviors.
Consequently, psychologists have a significant role to play assisting both financial advisors and investors. By understanding the emotional as well as intellectual drivers, they can help investors and organizations succeed. They can also contribute to our understanding of the personal dynamics of money, its value, risk-taking and risk perception and how collectively they impact decision-making. Join us as we attempt to probe these issues and more.
On January 1st, 2018 the Union’s largest state, home to about 12 % (just over 39.5 million) of Americans, legalized recreational marijuana for adult consumption. California’s passage of Proposition 64 reforms add crucial energy towards
For decades, economists and social scientists have debated economic decision-making. Economists argue that people are rational and selfish— and that human behavior is driven by rational decision-making that increases utility and maximizes returns. Emotions