Was Wall Street Driven by Fear or Facts?

Yesterday the United States stock markets experienced the largest one day drop in history. At one point the DOW Jones Industrial Average was down 998 points.  Then they “recovered” – to only lose about 300 points.  Nice. What caused this selling frenzy? Panic. Someone, according to the news media, hit the wrong button on a sell order that changed the amount from Million to Billion. From that point on, logic was in the passenger seat. Emotions (fear being the most prevalent one) took over. The rest is new history. Or is it really “new?”

Most economies are more driven by emotion than by facts. They are almost 80% Emotions and 20% Facts. We even describe them by states of emotional stability. We call bear markets “recessions and depressions: People sell in a “panic.” As in “The Panic of 1873.” People buy in a bull market “frenzy.” Most of the current economic problems America and finally the world are facing have been brought on by fears.

The United States GDP was growing and we hadn’t had one quarter as of this article of decline in early 2008, but the media was driving home the current recession. The stock market fell in September 2008 as a direct result of the failure of Lehman Brothers and a week of negative news coverage of it. Then it went global. Soon afterwards the Canadian economy went into a tumble. As a friend in Toronto told me, “When the US gets a cold, Canada sneezes.” Look at how the disaster in the Greek economy is affecting attitudes and markets around the world.

Fear is rampant today. Fear drives more economic decisions than the truth does. Fear of our own inabilities. Fear of loss. Fear of failure. What helped propel the wildest day on Wall Street? According to Patrick Rizzo and John Schoen writing for MSNBC.com, “Fear that the European debt crisis could spread was a factor.” What can you do in the face of mounting fear and despair?

The more successful people I network and socialize with choose not to participate in talk of fear and recession. Oh, they are pariticpating in the recession – successfully; just not the talk of fear associated with it.  I believe that if you work hard there is always enough money circulating and you will receive an ample amount of it. Senior leadership who are motivated by fear and who won’t spend money on improving customer service and educating their people will pay dearly when the present “crisis” is over and they find themselves without customers…and a job.

Is your motivation driven by fact or fiction? How do you overcome the emotional angle and start generating your own momentum? Start not buying into the fear around you and start making a difference.


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