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DON’T PANIC: 10% MARKET CORRECTION IS EXPLAINED!

August 5, 2011

As we are getting close to the third annual meeting of the academy of behavioral finance and economics at UCLA,  September 21-23, I will expand the focus of my blog “The psychology of investing” to Behavioral Finance and the global economy. Today I will explain why you should not panic at the present 10% correction in the US stock exchange and in some European stock exchanges because you know that it is driven by fear of mismanagement rather than by systemic negative economic indicators.

The correction is not a panic. Corporate, government, associations, union,clubs and a few individual billionaire investors are responsible for it (it is not a blame). Their primary concern is not maximizing profits but job security. They created a fast system of being able to trade in and out of of markets, surpassing your ability to do so. It is legendary in the electronic age. It is responsible for the bulk of the fast 10% market correction. Psychologically speaking it is done not out of corporate panic buy out of strategy of fear that says: “Let’s protect our CEO careers in case 1929, 1987, 2001 or 2008 return without warning.”  We are accountable to our rank and file membership. This market behavior is  CLASSIC ECONOMICS par excellence, a global financial system (except China) that isn’t concerned with improving structure (rules, behavior, context, framework, utility) of economic activity but rather with fixing function, a patchwork approach.  A case in point: European economy isn’t working well because over the years of EU existence government welfare, lack of productivity in Spain, Greece, Ireland and other countries increased to the point that Europe had to ask the hard-working Germans to bail Europe out. It is unthinkable in CLASSIC ECONOMICS to change the economic culture by changing the context (not content) of economic activity. Europe is going to issue a Eurobond to raise money to bail out countries instead of replacing classical economics with BEHAVIORAL ECONOMICS. The 10% market correction will end soon with groups putting their money back into the market – till the next economic crisis!

The academy of behavioral finance and economics at UCLA is 3 years old. Our meeting in on September 21-23. It is time for the public to learn about behavioral economics for the betterment of society.

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6 Comments leave one →
  1. August 25, 2011 6:22 am

    I liked your article is an interesting technology
    thanks to google I found you

  2. August 25, 2011 6:34 am

    Dear Maria,
    All my blogs, books I wrote and websites I have are designed to help people with information how to live well, especially my two WordPress blogs which are informative! Google will be honoured to list my ideas how to live well on top of page one so more individuals could get a great life. As for myself, I am wealthy enough from my Individual Behavioral Investing Theory (iBIT) that I don’t need to make money of the internet. I am speaking at UCLA about my theory on September 23 at 1:30 PM. Come say hello.

  3. August 25, 2011 6:41 am

    Thank you Google for somehow being able to help Europeans find my blog and translate from other languages to English. I assume that you wrote originally in Rumanian. Do you thank Google for finding my blog or for translating?

  4. August 25, 2011 10:48 am

    Thank you.

  5. August 28, 2011 8:13 pm

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