I was reading an article in the LA Times last weekend about an investor who recently saw a big jump in her earnings. The article covered her feelings about the recent rise in stock prices and how it effects her investing decisions. What I thought was interesting was how she was so afraid, even when things seem to be looking up.
Now, we all know the propaganda about the current state of the economy, rising unemployment levels, falling consumer "confidence", etc. But to an investor, they have to act on that fear. At least they think they do.
The person in the article explained her fear in vivid details. She said that the real question is why? Why are stock prices rising with unemployment levels and record highs and the growing national debt...
It made me think of a very important point. Don't think that thoughts, feelings and emotions affect reality? Just look at the Stock Market for a minute. In a bad economy, you'd think stocks would just fall and fall, but they don't. They bounce up and down and higher amplitudes then in a good economy. Why? Because when stock prices drop, people buy, when they buy, the stocks go up. When they get too high given the state of the economy, people sell out of fear that they will drop....and they do. It's like managing the anxiety of the investor.
Now I know what President Obama is trying to do when he tries to rally people into believing the economy is recovering. He's trying to break through the investor paranoia. It doesn't matter that the GDP is coming back up, that top economists in Washington are talking about the recession being over. Even Warren Buffet is saying that the economy has finally "bottomed out". Investors like the Woman in the LA Times just want to believe in the bad news. Bad news, apparently, is easier to believe in. "Better safe then sorry" sound familiar?
In the 80's there was this great movie called Sneakers. The story was complex, but the part that I always remembered was that Organized Crime had started to work the economy. The idea was, if you could convince investors that a company was going under, they will pull their money out and eventually the company will go under. They were looking at this strategy in terms of small businesses, large corporations, small Countries...
It even works in Politics. Next time you're looking through the headline news articles, check out how many headlines end in a question mark. People are so swayed by the power of persuasion that news reporters don't even really have to report on the facts anymore. They just put the question out there and it becomes news.
I like Byron Katie's' work were you are forced to review your thoughts and ask the question. Is it true? Are you sure it's true? What if it weren't true? We can persuade ourselves that things are going great and reverse the outside propaganda. It just takes knowing that the power is real. If a news article can convince me that Obama's health care plan will run the Country into bankruptcy, then I can convince myself that that's a bunch of bull and that the economy is coming back and that my life is always improving!!!