Wednesday, August 12, 2009

Making rational decisions in bear markets

BookValue
20/20 Money
Michael J. Hanson
( http://www.wiley.com/ )

Face the bear with guts

When fear begins to overtake reason, investors fall prey to the ‘do something’ reflex, cautions Michael J. Hanson in 20/20 Money: See the markets clearly and invest better than the pros. “Our Stone Age minds were made to react to fear – any sign of threat and our bodies get ready for action. That’s great for living in the wild with a sabre-toothed tiger on your heels, but it makes for horrible investing decisions.” In fearful times our minds get warped, Hanson describes.

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