Category: Money tips Release Date: 2007-07-05
World Cup draw a perfect full stop. But this does not give financial markets a lot of excitement and passion, the United States, Europe and Asia after the recent stock market blew out a ray showing signs of stabilization, which frightened investors to once again torn, indecisive up: continue to expect to see an empty or a rebound? There is no consensus analysts and economists. In fact, no one would have thought that one was born 157 years ago, and 102 years ago, the penny took the Nobel Prize in Medicine is given to the elderly has long been thought-provoking "third answer."
The old man is Ivan Pavlov, the former Soviet Union's famous physiologists and psychologists, the founder of theory of higher nervous activity. Pavlov has been with the sheep, current and bells made an experiment, he first used the current non-lethal electric shock experiment without any sign of land sheep, and the results of these gentle animals, and did not manic anxiety, but did not die. He then adds each electric shocks before a regularly scheduled program: knock bell. After some time, used to ring and current flock of sheep began to become hysterical when the bell sounded together, some of which even the poor guy died because of heart damage after another.
As a long-term to provide investment consulting services to professional Financial Group Chairman, well-known financial experts Richard Benson a recent analysis of popular articles will be most of the professional and non-professional international investors compared to the poor, "Pavlovian sheep "They may not because of global changes in the real effects of monetary policy kick in. However, Bernanke and his ilk in each currency" shock "before the bell sounded the move, but is likely to leave are accustomed to" conditioned reflex "investors In an atmosphere of panic towards the capital cemetery.
This is clearly an interesting analogy has a clear economic footnote. Science of psychology into behavioral finance theory, finance and creativity to find that market investors are often not as good as the traditional theory assumptions is so rational, and their mental activity is not only the formation of the market is expected to bring far-reaching influence has kept market behavior a strong personality full of color. Therefore, the monetary authorities released the news of policy changes, the market players will immediately amend its own by virtue of experience and knowledge of investment strategy, that is, pre-emptive and to the policy "ring" caused the market ahead of adjustments, these adjustments may be is rational, it may be non-rational nature of the investor depends on the professional competence and mental state.
In fact, I think the analogy Benson played only half of the policy changes brought about market volatility, when threatened, psychology, another well-known "Jonah Complex" further amplifies shocks. "Jonah Complex" represents an opportunity for self-escape in front, back and cringe psychology. Investors in many markets to policy changes at the receiver when the transmission of information, lack of self-confidence, always habitually rely on the so-called market analysts of the investment proposals, this strategy as a direct result of blind obedience to follow suit and on the "herding effect", a small number intentional or not, the panic will soon be in the market caused a big uproar among the. Excessive transaction the market is likely to also give policy makers the potential to bring pressure on the policy shift to the new paving.
In such a helpless never-ending process of interaction among the style, with "Jonah Complex" a "Pavlovian sheep" are more likely to frequent injuries. This is for the current turmoil in international financial markets offer an alternative interpretation. In previous years, ultra-loose monetary policy on a global scale to create a bubble of capital, so countries began to tighten monetary policy after the bubble burst signs constantly emerge, monetary policy makers so distracted, and constantly emit contradictory policy messages, the market Among the participants in the ring after another into a sudden panic, all of this into a turbulent market turmoil.
Therefore, the international financial market had to face such an embarrassment, despite the global trend of monetary tightening has been set, everywhere, continue to raise interest rates, but the market trend but did not show uniform patterns. Such wide fluctuations can only conclude that the "policy of ring tones," different, rather than the policy itself. The Fed is always a moment to demonstrate to the economic slowdown concerns, while also showing abhorrence of inflation; people think the Bank of Japan will raise interest rates for a while around the corner, while it makes one feel that distance is not a view. Overwhelmed by the uncertainty of market players is uncertain in the context of only jeopardized.
That being the case, why should we do come to their senses, "Pavlovian sheep" mean? Either upward or downward, the market is always give us a market panic investments can not be overlooked the risk of addition. Is precisely for this reason that an increasing number of market analysts who give such a proposal: to withdraw capital markets, at least you can get the interest. In raising interest rates into the tide, this "third answers" have begun an exciting enough. After all, the international financial markets is a popular saying: "cash is not trash (cash is not trash)."
(Author: International Finance, Fudan University)
