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Confidence a matter of psychology
The market is down, shock, horror, woe! In all the world there is nothing new, things come, they go, and then they come around again.
The Mail and Guardian reports that consumers confidence is flat and that this is indicated by research carried out by the December Reuters Econometer.
This apparently showed that economic growth will slow sharply this year. The Econometer is a survey of 18 economists. Economics is also known as the dismal science.
So rather than harping on about the problems, and there undoubtedly are economic problems at the moment, rather lets look at the effect of what you believe on what you do.
Elliot Wave International is a statistical research company that tracks economics. They have a fine headline 'A Bear Market That Lasts Forever?'. They look at the logic behind where there is a bear (negative) market and the conventional wisdom that states that a feedback loop is generated and that the market is said to be bad, so confidence drops, which leads to a loss of growth and then confidence drops because everyone is saying that the market is bad and it grows less and so on and so forth.
The logical outcome of this is that the bear market would continue forever and that it would just get worse and worse until there is no more economy.
On the flip side that would mean that when there is a bull (positive) market, everyone would get terribly excited and that would lead to growth which would get every one excited again and then more growth and so on and so forth...leading to a never ending boom.
That is clearly not what happens in reality.
The Elliot Wave uses Socionomics, which is the effect of the human psyche on economics and it is a lot stronger than any of the so called 'fundamental' forces that lie underneath an economy.
The Elliot Wave is a method of measuring periodicity in the cycles that markets go through.
As the folk at EWI put it 'we know that it's not "loops" that create booms and busts - people's collective emotions do, in predictable Elliott wave patterns. And we also know that there is a light at the end of this tunnel'.
The thing is that like all things what has happened before will happen again.
Justmoney is not into getting all hyped up or jumping on the 'woe is me' bandwagon, what we prefer is a nice smooth long term approach, so don't get ahead of your budget, get a nice safe savings account and wait for the market to turn, because it will turn and then it will turn again.
Don't believe the hype it's not called the dismal science for nothing!
More about Elliot Waves and Socionomics here.
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