Emotions move markets

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In an interesting article by the renowned economic commentator Justin Urquhart Stewart, he analyses the movement of the US equities market since December 2018 and the reactions of investors and their emotions.

He concluded that emotions move markets. He also concluded that emotions move markets because markets are made by humans.  

He writes:

‘The human brain is not a cool, calculating, analytical machine – it is more like a warzone where various factions are battling for control. The biggest fight is between the neocortex and the reptilian complex – or, to put it another way, between the ‘reasoner’ and the ‘lizard’.”

The reasoner wants to take time, analyse issues and think about potential options before calmly committing to a course of action. The lizard sees every decision as fight or flight, life or death – needing an immediate, emotional, instinctive reaction. We all know people whose lizard tends to win out, and others whose reasoner dominates the contest. 

Financial markets can sometimes get … well, lizardy. They jump around and overreact. They jump around and overreact. It is therefore useful to ask if lizards are driving the market when it falls. Is there something wrong with the economic fundamentals, or is an emotional overreaction on the go? ‘

You can read the full article here: https://bit.ly/2v7qrtz

Justin concludes that we are in an emotion-driven environment and points out that timing markets is tough, especially when emotions are ’ running the show’.

He also advises that clients investing for the long term should look away from the markets and resist the temptation to react to short-term ups and downs.

But that’s not so  easy in a time of volatile markets when it is your own hard earned money at stake!

At BlackBear Financial Group however, we are one step ahead. We have sought to adopt a more rational, proactive approach to the Investment and management of our clients’ hard-earned money because, no matter how sophisticated or diversified a portfolio may be, there is very little that can be done to accurately predict investment performance, especially in ‘lizardy’ markets.

We wanted an investment  proposition that mitigated investment risk and maximised returns whilst taking the human emotion out of the equation. The solution we found was Clever Adviser Technology.

Clever Adviser Technology takes the human indecisiveness, bias and emotion out of the investment process.

The system collects and examines information from over 4,000 UK registered funds. It monitors individual client funds, checking whether each is doing well – or not so well – and objectively selects new funds to replace underperforming ones.

The CleverAdviser Innvestment service has been guided by leading professors of finance at the internationally renowned  CASS Business School and BlackBear Financial Group- have been working with Clever Adviser Technology for several years now with impressive results.

So whereas you can’t control the markets, you don’t need to be a lizard or a reasoner in relation to your investments – you just need to be Clever.

Check out our website for more details of Intelligent investing with CleverAdviser here:

Interested? Contact us on 0151 305 2305 or email hello@blackbeardg.co.uk for help with your  investments today.