Investors around the world are selling stocks in financial companies, amid fears that what happened to a major California-based firm may also happen to other companies and thus spread throughout the entire economy of every industry in every country around the world.
Sound logical and reasonable?
At root, that is the thinking -- or is it unthinking fear -- that is driving the selloff in recent days.
But does Wall Street drive the entire national economy?
And what does fear -- or the alternate, enthusiasm -- have to do with how people behave?
The short answer is yes, it does. But does the fear of a few people in a minor sector of society infect the confidence of the entire population?
Another short answer is yes, it does.
A better question is this: Does rational thinking always foster the behavior of everyone in the population?
The short answer to that is no, it does not. People do not always behave rationally, nor do they always think rationally.
That brings up the question of how to define "rational." And the related word, "rationalize."
People devise explanations of their behavior to make it sound like they know what they're doing and have good reasons for doing what they do.
All this comes to mind as investors in relatively small sectors act as if the world depends on their views of what may happen in the world in the near future.
Or it may not happen.
Here's a reality check: The number of people directly involved in stock markets around the world is exceedingly small, compared to the total population. Yet this tiny group believes the entire world depends on their opinions -- rational or not -- on how the rest of their nation and the world will behave in the near future.
Rationalize, rationalize, rationalize.
Sound logical and reasonable?
At root, that is the thinking -- or is it unthinking fear -- that is driving the selloff in recent days.
But does Wall Street drive the entire national economy?
And what does fear -- or the alternate, enthusiasm -- have to do with how people behave?
The short answer is yes, it does. But does the fear of a few people in a minor sector of society infect the confidence of the entire population?
Another short answer is yes, it does.
A better question is this: Does rational thinking always foster the behavior of everyone in the population?
The short answer to that is no, it does not. People do not always behave rationally, nor do they always think rationally.
That brings up the question of how to define "rational." And the related word, "rationalize."
People devise explanations of their behavior to make it sound like they know what they're doing and have good reasons for doing what they do.
All this comes to mind as investors in relatively small sectors act as if the world depends on their views of what may happen in the world in the near future.
Or it may not happen.
Here's a reality check: The number of people directly involved in stock markets around the world is exceedingly small, compared to the total population. Yet this tiny group believes the entire world depends on their opinions -- rational or not -- on how the rest of their nation and the world will behave in the near future.
Rationalize, rationalize, rationalize.
No comments:
Post a Comment