A few points:
(1) I'm with Gary on this one in that this article has little to do
with psychology. Rather, it has more to do with the types of
strategies that stock traders (in contrast to stock investors)
engage in and what they might do when a market is in a "panic"
and the usual guidance is shown to be completely inadequate
in making decisions.
(2) Of course, the purpose of the NY Times article was not to
systematically investigate how many stock traders or, more
generally, financial analysts actually use psychic methods relative
to, say, econometric models or "technical analysis" but to
highlight that a group of these people have turned to psychics
because they no longer know what sources of information to rely
upon. One just has to watch CNBC's "Fast Money" show to
see how "day traders" work (i.e., people who buy/sell stocks,
take positions/options, etc., on a daily basis) and one is likely
to see how empirical and pragmatic they can be, especially in
the face of a market that is extremely violatile (i.e., can experience
swings of 400-900 points on the Dow Jones Industrial Average in
a single day). A common saying is "Buy the dips, sell the rips" (i.e.,
buy a stock when its price goes down, then sell it when it goes up a
certain amount, say 10%; strategies can be far more complicated,
using "puts" and other strategies to insure one's position and one also
has to consider fees and taxes in their calculations [stock bought and
sold in this manner are taxed at regular income rates instead of the
lower capital gains rates that are applied when stock are held "long"])
but the recent market activity indicates that one might have to buy and
sell in a matter of hours or even minutes whereas in the past it would
have been days or weeks. This realization may not be possible
for some traders to accept.
(3) For all of the market activity, overall volume is low (i.e.,
for the most part, only a small group of people seem to trading).
Many people have taken their money out of stocks and have
placed it elsewhere (e.g., short-term Treasury bills, which explains
why the yield for a 90 day bond was almost 0.0% for a short time
last week -- this is equivalent to giving the U.S. government your
cash and saying I'll be back for just this amount in 90 days).
The major strategy is capital retention in contrast to loss (why buy
a cheap stock today if it will be cheaper next week or, worse, is
in a death spiral to $0.00 a share?). Many people labor under the
illusion that they can infer when prices will go up or down and fail
to realize that "taking the money off the table" is the only reasonable
strategy. It's comparable to a person playing poker or blackjack
who can't stop playing until completely out of money or seriously in
debt. When nothing seems to work, why not bet on a psychic if one
can't imagine or accept a more reasonable strategy? It doesn't make
sense but it might be somewhat comforting.
-Mike Palij
New York University
[EMAIL PROTECTED]
On Sun, 23 Nov 2008 08:29:31 -0800, Gerald Peterson wrote:
The article does not reference psychology and I don't think any surveys have
indicated THAT kind of confusion today even if there might have been one
historically. My students sometimes think I am a Dr. Phil, but seldom expect me
to give them a tarot reading. Indeed, psychologists, especially the more
research-oriented kind, have been involved in battling all kinds of
superstitions....perhaps a legacy of earlier skepticism in psychology (e.g.,
Hall, Jastrow, et al) toward James as Chris noted. Psych research does find
connections between superstition and factors of control, uncertainty, etc., so
this use of psychic-astrologers and similar types is not surprising at this
time. Confusions about psych as science (at least in north america) and
struggles regarding its relevance, probably stem more from a generic
well-spring of popular belief in the supernatural and emphasis on a naive
pragmatism that so characterize popular thinking (see E. Taylor's "Shadow
Culture: Psychology and Spirituality in America," 1999).
I wonder if the confusions of psychology with clinical work, in addition to
forms of superstitious quackery, may be partly related to the ways
psychological researchers shun the name psychology itself and refer to
themselves as "cognitive scientists," "neuroscientists," etc.? Gary
>>> "Christopher D. Green" <[EMAIL PROTECTED]> 11/23/2008 10:35 am >>>
In case you were wondering why (scientific) psychology (still) doesn't
get much respect from natural scientists, psychics are apparently doing
a booming business during the current business bust.
http://www.nytimes.com/2008/11/23/fashion/23psychic.html?_r=1&ref=fashion
This is quite amusing from a historical perspective. It is exactly the
same battle that psychologists were fighting at the turn of the last
century, when Hall, Cattell, Titchener, Jastrow, and others were
insisting that psychology was a natural science, entirely separate from
the psychics and spiritualists who also called themselves
"psychologists" at the time, but were unable to make the distinction
stick in he minds of the publics and those of other scientists...
especially with William James continuing his lifelong search for
telepathic powers.
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