Article Category: Psychology

Matt’s Market Insights

The downside bias remains strong and the mood of the market has noticeably changed. Nearly all support levels that were outlined on Friday have been violated, indicating a high probability of further short-term declines.

A concept often studied in psychology, and applicable to the markets, is the idea of self-fulfilling prophecies. This refers to a prediction that either directly or indirectly comes true as a result of a positive feedback loop between belief and behavior. It boils down to someone believing in an outcome to the extent that their behavior actually causes that outcome to manifest.


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Posted in: Bonds Gold Momentum Oil Psychology

Matt’s Market Insights

Worried about China dumping US Treasuries?

Recent data from the Treasury Department shows that China bought more US Treasury debt in October than any other foreign country. The increase of $10.7 billion was comprised mostly of short-term Treasury bills, which shows that China is very alert to the looming interest rate risk. The price of short-term bonds does not swing as wildly as those of long-term bonds when market interest rates change.


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Posted in: Federal Reserve Gold Inflation Interest Rates Psychology Volatility

Matt’s Market Insights

A budget deal has potentially been reached by House and Senate negotiators. This was rumored to be in the mix over the past couple weeks. The market response so far has been mixed. Some are seeing this as a relief, since it should prevent another government shutdown. Others are less than thrilled because the issue of raising the debt ceiling will still require attention in February or March of next year. The deal will go to the House and Senate for approval tomorrow.


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Posted in: Debt Economy Federal Reserve Psychology

Matt’s Market Insights

As of yesterday, we've had five straight down days in the Dow. I laid out a number of reasons for this weakness in Wednesday's remarks, the most current being implications about Friday's jobs report. Lately a lot of media attention has been given to the possible existence of errors and manipulation in the Bureau of Labor Statistics reports. While I can't speak to that, I will say that markets trade on expectations, and Friday's report will continue to have a large impact on those expectations.


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Posted in: Dividends Federal Reserve Interest Rates Psychology

Matt’s Market Insights

In last Friday's Remarks I mentioned three "cognitive biases" that affect all investors in their ability to interpret information. I'd like to explore these a bit further. Let's begin with a broader definition of what a cognitive bias is.

Cognitive biases stem from the field of Psychology - which aims to scientifically study the thought patterns and behaviors of people. These biases refer to natural human tendencies to think in certain ways; they represent deviations from "normal" or "standard" rationality. We'll discuss these biases from an investing standpoint, but realize that these biases are omnipresent and influence us in our jobs, relationships, and life in general.


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Posted in: Dollar Economy Federal Reserve Psychology

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