Reminder About Fear: The Stock Market Predicted 11 of the Last 6 Recessions
Written by Rivka
I woke up in the middle of the night with this thought: Buy IBM. It's high yield, they don't need to borrow money to operate, and it's so cheap right now.
And if I'm thinking that, so are others, which brings us to this: There are two things, and two things only, that move the stock market: fear and greed. I'm fascinated by the fear-greed relationship because it's also one of the polarities that moves us emotionally, so it makes sense that we've created a powerful memetic (social organism) infrastructure that brings it to collective life.
We want so badly to move from fear to greed, yet we can't scrub the fear off of us sometimes, no matter how hard we try, and regardless whether there's actual reason to let go of the fear. When fear grips us, it can feeds off itself, at which point it gets out of control, until we're drowning in it. And then something kicks in where we get sick of it. Often, the move from fear to greed and back again, as exhibited by the stock market (historically, as well as what's coming), has no real rational catalyst.
I'm editing my next novel, LIES I WISH MY FATHER TOLD ME, which is all about fear and what it does to us. (TWO WEEKS UNDER is about shame.) So the idea that the switch from fear to greed happens without the fear necessarily being assuaged, is on my mind. Same goes for having more fear than is necessary.
Our ability to get sick of fear is a great thing. I was at my local grocery market on Friday, after the stock market closed. A horrible, stressful week, people tense every day. But then something peeked out. Liveliness, courage, the need to feel good again. The butcher and a woman in line were whispering about which stocks they liked.
There are two stock market terms I love: lagging and leading indicators. Lagging are the things that have already happened, or already taken into consideration because they will definitely happen (jobless rates going up, mortgage foreclosures). Lagging indicators are theoretically already priced into the market. Leading indicators are things that haven't happened yet and haven't been taken into consideration by the market yet.
We fear both. Our lives have lagging and leading indicators, too. The unyielding fear of the lagging ones is what causes free-floating anxiety and panic, I think, because there is every reason to stop being afraid of what you already know, if you face it. But if you don't, it follows you everywhere. And if you don't get a grip on your lagging indicators, you can't feel hopeful and happy about your leading ones.
I hereby declare my ex-husband a lagging indicator! Actually, I have a list: my mother dying of cancer, falling and breaking my ankle running in Riverside Park, my father dropping dead when he was 54, being bitten by a German Shepherd when I was 8, and the money I lost last week in the market.
Okay, so my list is a lot longer than that. Kinda fun to write it down. Share your lists if you like.
The real question is, aside from lots of talk, do I have the guts to buy IBM?