Pain and Happiness
When you watch the financial markets like we do at Investment U, you hear and read a lot about fear and greed.
These are the base emotions that push stock prices up and down. When fear rules, investors tend to sell riskier assets like stocks and flee to “safe haven” assets like U.S. Treasury securities, which are guaranteed.
And when greed dominates, investors move away from those safer investments and put money back into stocks, driving the market up.
Some legendary investors have had a lot of success preying on those herd-like emotions. Warren Buffett, one of the greatest investors of all time, once said it’s wise to “be fearful when others are greedy and greedy when others are fearful.”
That is, Buffett grows more cautious when stocks are shooting skyward, and he looks to snatch up bargains when stocks have sold off and are at lower prices. It seems to have served him well – he’s one of the world’s wealthiest individuals.
Fear and greed are closely related to two more fundamental human feelings: pain and happiness. People generally seek to avoid pain and increase their personal happiness.
Unfortunately, many younger Americans are now finding they need to postpone the American dream of owning their own home because of a particular pain point – the burden of student debt.
Trends Expert Matthew Carr looks into this alarming trend, though he finds that the American dream isn’t dead… It’s probably just deferred.
Pain avoidance isn’t always a good thing, new Contributing Editor Aaron Task writes. In fact, paying for our purchases the easy way – through Facebook or Uber or other mobile apps – may result in consumers spending more money than they would otherwise. Fortunately, Aaron tells us indulging in that Starbucks mocha latte is not always a bad thing, no matter how we pay for it. Whew!
A quality cup of coffee may in fact add to happiness, if it brings us pleasure. That emotion, along with purpose and pride, seems to be the key to happiness among the world’s longest-living populations. It’s a topic Chief Investment Expert Alexander Green looks at in a series of pieces now running on Investment U.
Alex – along with all of our experts – is a huge proponent of diving into investing at an early age, even with modest amounts, to avoid financial pain later and build the nest egg needed for a happy retirement. We explain it all here, with an audio version you can listen to on your commute.
Enjoy your day,
For more investing insight, you can sign up for our free e-letter below. It’s packed with useful information and ideas.
About Matt Benjamin
Matt has worked as an editorial consultant to the International Monetary Fund, the World Bank, the Economist Intelligence Unit and other global macro-institutions. He wrote about markets and economics for U.S. News & World Report, Bloomberg News and Investor’s Business Daily, among other publications. He also worked for several years as head of political economy for a Financial Times-owned macroeconomic consulting firm, advising hedge funds around the world. Matt’s claim to fame is that he’s interviewed two U.S. presidents and has spoken with five Federal Reserve Chairs from Paul Volcker through Jerome Powell. Matt also served as The Oxford Club’s Editorial Director for two years.