Contrary emotions in an upside-down market

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[ADVISOR VIEW] It's a truism that 90% of financial decision-making is driven by emotions and 10% by logic and reason. This is why it’s wise to evaluate the cycle of market emotions in this topsy-turvy world: MarzelSwart - PSGPretoriaOos. PersonalFinance

There are two sides to the investment management coin: the maths or calculations and the emotions or attitudes that exist concerning money. It is a truism that 90% of financial decision-making is driven by emotions and 10% by logic and reason. This is why it’s wise to evaluate the cycle of market emotions in this topsy-turvy world.

In his book Supermoney, Adam Smith described the concept of a bull market by comparing it to a glamorous party or ball. Time will bring the answer and settle the debates over the bull market, but the party – as glamorous as it was – is over, and our euphoria has changed overnight into anxiety, denial and fear.Those participating in the market, be they asset managers, wealth advisors or investors, are all affected, while the cycle of market emotion is unstoppable. More important still is our own emotional intelligence – how we experience and interpret these emotions and how they influence our investment decisions.

 

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