In a new bull market, you can almost feel the greed tide begin.
Usually it appears a few years after the market bottom, but this time is different. The coronavirus pandemic has made death salient, spurring certain psychological tendencies. Buying stocks is one result.
The cognizance of death, and our innate fear of it, drives much of our conscious and subconscious behavior, according to psychologist Sheldon Solomon. When mortality is front and center, as it is right now, people turn to money for security.
They want to feel safe, and money is a proxy for safety. For some people, “the acquisition of money is a death-denying fetish,” says Solomon.
Conspicuous consumption of stocks, bolstered by the frictionless appeal of zero-commission trading, has increased for this reason. Daily trades across the big US retail brokerages ETrade, TD Ameritrade and Charles Schwab have more than tripled. Retail traders now make up 20 percent of US equity trades, double last year’s total.
Source: Financial Times
From a psychoanalytic point of view, stocks have become “phantastic objects” in the minds of investors, defined as something which fulfils our deepest desires (in this case for security and protection).
Freud argued the reality of our minds follows two principles, the “pleasure principle” and the “reality principle.” The former makes us seek continual enjoyment and gratification, while the latter appeals to reason and creates resistance to avoid any negative outcomes.
In rising markets, unconscious p