Comments on: Dear Irrational (do we fall in love with our investments?) http://danariely.com/2008/12/05/dear-irrational-do-we-fall-in-love-with-our-investments/ My Irrational Life Tue, 07 Feb 2012 23:59:05 +0000 hourly 1 http://wordpress.com/ By: george thomas http://danariely.com/2008/12/05/dear-irrational-do-we-fall-in-love-with-our-investments/#comment-3022 Fri, 26 Dec 2008 00:45:17 +0000 http://www.predictablyirrational.com/?p=331#comment-3022 I think people fall in love with their holdings, period. There are many stockholders who feel that this is not a good time to buy stocks. But if they were rational, shouldn’t they then sell all of the stocks they hold?

]]> By: Mark http://danariely.com/2008/12/05/dear-irrational-do-we-fall-in-love-with-our-investments/#comment-3021 Tue, 16 Dec 2008 14:09:06 +0000 http://www.predictablyirrational.com/?p=331#comment-3021 I also have a background in the financial industry. Brokers and clients commonly fall in love with their investments. In the current environment we need to stress to our clients that the market has natural cycles. Most forget the market has corrections all the time. Remember 2001-2002? At this moment, the market has “gone on sale.” Now is the time to be buying not selling. I suspect most clients who got hurt were borrowing on their paper earnings or treating it as if was cash out of their pocket. Show them the total they have put into the market and how much it is worth now. Don’t focus on the paper loss focus on the overall paper gain. And remind them, it isn’t a Real gain until they have the CASH. The rest of the time it is rolling around in that biggest casino on earth, the market. They were gambling and if they made risky choices, as many did, they gambled and lost. Stocks are by definition one of our riskiest gambles. That’s my 2 cents on the subject.

]]> By: Sean http://danariely.com/2008/12/05/dear-irrational-do-we-fall-in-love-with-our-investments/#comment-3020 Wed, 10 Dec 2008 20:26:45 +0000 http://www.predictablyirrational.com/?p=331#comment-3020 I think that Jim Cramer called this a “cult stock” once. Perhaps I am wrong in attributing the term to Cramer, though I have heard the term used in reference to Apple’s stock – which is known to see rapid increases and decreases in it’s price – without much rational expectation of greater future earnings.

The “cult stock” seems to maybe be the brokers’ way of talking about the endowment effect among certain stocks? Perhaps this has more to do with the love that many consumers have for Apple’s products, a love that perhaps accounts for folks buying and holding the stock that might not otherwise be participating in financial markets.

Just a thought…

]]> By: jeremy http://danariely.com/2008/12/05/dear-irrational-do-we-fall-in-love-with-our-investments/#comment-3019 Tue, 09 Dec 2008 03:01:48 +0000 http://www.predictablyirrational.com/?p=331#comment-3019 Dear Irrational,
It would be great if you changed your RSS feed from partial to full. Makes it A LOT easier for those of us using feedreaders.

]]>