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Market and Life Awareness: Don't Catch the Negativity Cold
Pinnacle Digest writes: Negativity is abundant amongst investors, as evidenced by the ongoing stream of money leaving equities into bonds. Holmes finds it difficult to pinpoint the reason for growing pessimism towards the markets as unrest and turmoil continue to flourish.
Daily polls continue to find Americans at an extreme political division. Scenes of anti-austerity riots in Greece, Spain and Portugal are never far from the news. The Shanghai Composite Index recently fell to a new low amidst a slowing Chinese economy. These are all leading indicators creating and sustaining negative sentiment towards the global economy and equities.
Harvard University Professor Nicholas Christakis recently gave a speech titled, “How social networks predict epidemics.” Although the speaker was focused mainly on obesity, Holmes was fascinated by how the speech might help shed light on this unrelenting feeling of doom that has left so many people lacking confidence in equities.
If feelings and sentiment are contagious, it is all about connections. The people close to you, including your family, co-workers and friends dramatically impact your mental psyche and physical health. This translates into daily decision making which obviously impacts your entire world.
Holmes challenges doubters, by stating, "If you don’t think connections matter, consider the difference between a pencil and a diamond." These two common objects are both made of carbon, the atoms are just arranged differently. Graphite is soft and dark, whereas Diamonds are hard and clear. Our environment overtime shapes and forms us all.
Holmes' main message which he echoes from Christakis and his reason for sharing this video, is simply this: If we understand how social networks form and operate, we can better understand what leads to market crashes and how investor pessimism can persist.
Watch the TED Video on the importance of connections here
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