Positive Spin.

When a TV reporter or a website you regularly visit hollers, " The market is plunging and has lost 100 points!” “All markets are down today!” Most of us instinctively shudder. We don’t have to. Think of it, if the stock market fell on a day by 1.2% we panic and check with our financial adivser or the stock broker and try to sell our stocks. But if you hear the weather man on TV/Radio tells us the teperature is plugging and has dropped from 81 degrees to 80 degrees, that too it is a 1.2% drop, you will not panic. As a matter of fact don't even pay much attention to it. It is because we are afraid of losing money in the first case and not in the second case.

Think of it, if the way the TV reporters or websites report teh crashing of the markets in a different way how would it change our perception and hence change our reaction. Let us say there is a TV channel "Benjamin Graham Financial Network" (BGFN) and you switch on to this channle and the audio doesn’t capture that famous sour clang of the market’s closing bell; the video doesn’t home in on brokers scurrying across the floor of the stock exchange like angry rodents. Nor does BGFN run any footage of investors gasping on frozen sidewalks as red arrows whiz overhead on electronic stock tickers.

Instead, the image that fills your TV screen is the façade of the New York Stock Exchange, festooned with a huge banner reading: “SALE! 50% OFF!” As intro music, Bachman-Turner Overdrive can be heard blaring a few bars of their old barnburner, “You Ain’t Seen Nothin’ Yet.” Then the anchorman announces brightly, “Stocks became more attractive yet again today, as the Dow dropped another 2.5% on heavy volume – the fourth day in a row that stocks have gotten cheaper. Tech investors fared even better, as leading companies like Microsoft lost nearly 5% on the day, making them even more affordable. That comes on top of the good news of the past year, in which stocks have already lost 50%, putting them at bargain levels not seen in years. And some prominent analysts are optimistic that prices may drop still further in the weeks and months to come.”

The newscast cuts over to market strategist Ignatz Anderson of the Wall Street firm of Ketchum & Skinner, who says, “My forecast is for stocks to lose another 15% by June. I’m cautiously optimistic that if everything goes well, stocks could lose 25%, maybe more.”“Let’s hope Ignatz Anderson is right,” the anchor says cheerily. “Falling stock prices would be fabulous news for any investor with a very long horizon.

Don't you wish you have a channel or medium you could use. Exactly, the same thing I was thinking. Go ahead and tune into http://ramidirkr.blogspot.com/ for your cheerful media on stocks, list of all the stocks on SALE!!!!! in different stock exchanges. Initially we are concentrating on the DOW (New york, US) and BSE (Bombay, India) stock markets. I'll try my level best to add all the information I can, if you find any interesting articles or sales of stokcs please send an email to ramidirkr1.investing@blogger.com

The Investor and Market Fluctuations

This article is from Intelligent Investor. Chapter 8: The Investor and Market Fluctuations. I have made some small modifications to it. This explains why we tend to buy when the stocks are going up and sell when the market is going down.(Graham suggests in his book buy stocks when they are reasonable priced irrespective of if the market fluctuations). This also explains why we fixate on the raw magniture of a market decline and forget to put the loss in proportion.

Our money and our brain:

Why does investors find Mr. Market so seductive? It turns out that our brains are hardwired to get us into investing trouble; humans are pattern seeking animals. Psychologists have show that if you present people with a random sequence-and tell them that it's unpredictable-they will nevertheless insist on trying to guess what's coming next. Likewise, we "know" the next roll of the dice will be even, that a baseball/cricket player is due for a homerun/sixer. that the next winning number in the lottery will definetly be 4-27-9-16-1 and the this hot little stock is the next microsoft.

Groundbreaking new reserach in neuroscience shows that our brains are designed to perceived trends even where they might not exist. After an event occurs just two or three times in a row, regions of the human brain called the anterior cingulate and nucleus accumbers automatically anticipate that it will happen again. If it does reapeat, a natural cheminca called dopamine is released, flooding our brain with a soft euphoria. Thus, if a stock goes up an few times in a row, we reflexively expect it to keep going-and your brain chemistry changes as the stock rises, giving us a "natural high". We effecively become addicted to your own predictions.

But when stocks drop, that financial loss fires up our amygdala the part of the brain that processes fear and anxiety and generates the famours "fight or flight" response tht is common to all conrered animals. Just as we can't keep our heart rate from rising if a fire alarm goes off, just as we can't avoid flinching if a rattlesnake slithers onto our hiking path, we can't help feeling fearful when stock prices are plunging.

In fact, the brillian psychologists Daniesl Kahneman and Amos Tversky have show that the pain of financial loss is more than twice as intense as the pleasure of an equivalent gain. Making 1,000 bucks on a stock fells great, but a 1,000 bucks loss wields an emotional wallop more than twice as powerful. Losing money is so painful that many people, terrifed at the prospect of any further loss, sell our near the bottom of refuse to buy more.