STREET DOGS

From Joshua Brown at The Reformed Broker:

The human animal will never be free of the two constants, fear and greed. This is regardless of whether they’re investing in closed-end funds, high-cost products, rules-based products, faith-based products, socially responsible products, individual stocks, passive strategies, active strategies, alternative strategies, physical assets or digital coins.

The urge to avoid downside and to be a part of bull markets and bubbles is undefeated, throughout all time and space. It applies universally, to people of all age groups and all over the world. It is a part of our DNA. Our ancestors who didn’t run from danger or run toward reward were not likely to have passed on their genes. Our ancestors who were able to take the risks necessary to secure a mate and shelter, have handed down the fight or flight instinct to us. There is a certain arrogance necessary in order to believe that this ubiquitous and permanent condition can be eradicated by software or research or seminars or books.

You are an animal. Your brain contains an almond-shaped mass of grey matter in each cerebral hemisphere that reacts to stimuli, regardless of what university you attended or how many articles you’ve read. Your brain also contains a hippocampus, which is responsible for the control (or lack thereof) when it comes to anxiety. When you are being stimulated pleasurably, such as during a heroin high or a successful trade you’ve got something behind your left eye called the lateral orbitofrontal cortex. It is the seat of reason and behavioural control and turns itself off while you’re enjoying yourself.

There will never be a Wall Street product created or a software program written that can override fear and greed although awareness and support may help.