One Minute Economics: Fear and Greed... in One Minute: Emotional vs. Rational Economic Thinking and Investment Decisions

  • Thursday, 05 December 2019 16:45
People talk a lot about fear and greed in an economic context but few understand that broadly speaking, these two are arguably the top drivers of market behavior. In one minute, I've explained the let's say economics behind fear and greed as well as the implications as far as rational economic thinking and ultimately your investment decisions are concerned. Ask ten people if they make investment decisions in a rational or emotional manner. Most will probably be quick to say that their economic decision-making process is a strictly rational one, looking down upon the "mere mortals" who let the emotional dimension influence what they do with their money. However, if you were to follow those ten people for a year or so, you'd most likely come to the conclusion that in reality, the emotional dimension influences them a fair bit more than they let on. Oftentimes, we delude ourselves into thinking that our economic decisions are rational, finding arguments which fit our narrative and are so compelling that we even believe them ourselves... let's just say this isn't exactly the most realistic mindset in the world and this video will explain what is :)

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