The Stock Market and Financial Market Explained in Cartoon

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• published: 28 Jun 2014
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Get Free Gold Investment Kit: http://tiny.cc/6dq3hx Originally printed in the Baltimore Sun on Oct. 17, 1989, after U.S. stocks dropped 6.9% on Oct. 13, it still circulates widely on Wall Street. ("The nation's most important financial institution" was the New York Stock Exchange.) Remarkably, new research suggests that KAL might not just have been using his imagination to make fun of the way investors can turn on a dime for no reason whatsoever. He might also have put his finger on a psychological process that can make investors turn on a dime for a reason they're entirely unaware of. Hearing or seeing a word that sounds like an action can prime you into taking that action, according to "From Bye to Buy: Homophones as a Phonological Route to Priming," to be published next month in the Journal of Consumer Research. Despite its infelicitous title, the paper may help explain, at least in small part, the mystery at the heart of KAL's cartoon: How do contagions spread through financial markets? The study, run by marketing professor Derick Davis at the University of Miami, exposed people to homophones (words that are pronounced the same but spelled differently) like "bye" and "buy." For example, participants read a short blogpost about travel in Canada that ended either with "Bye bye!" or "So long!" Then they were asked how much they would pay for a name-your-own-price dinner for two at a local restaurant. Those who had read the version of the blogpost that ended with "Bye bye!" were willing to pay up to 55.5% more than those who read the "So long" version. Merely seeing the word "bye" apparently made them more eager to buy. That was especially true for those who had to memorize a seven-digit number beforehand -- the kind of distraction that many experiments have shown can reduce the mind's reliance on logical reasoning. You should probably buy a few grains of salt to sprinkle onto these findings. Recently, critics have argued that related claims about "priming" or unconscious influences on behavior are fragile and difficult to replicate, while psychologist Uri Simonsohn of the University of Pennsylvania has shown that many similar studies are statistically underpowered. Prof. Davis, who ran this study, concedes that the effects he found are small. However, he adds, the people in his experiments weren't just college students in a lab but were recruited online from a broader cross section of the population. And, he points out, people often fail to detect the incorrect use of homophones while proofreading, because the identical sound of the wrong word puts them in mind of the right word. (Think of all the times you didn't even notice that you typed "they're" for "their" or "there.") If "people are distracted by noise, time pressure and other commotion," says Prof. Davis, their behavior may be more easily swayed by the homophone effect. When prompted by the sound "bye," he says, "on average across many people, a small change in 'buying' behavior may be possible." Prof. Davis, emphasizing that this is a speculation, adds that "a distracted investor primed with 'bye' might misremember reading that the stock was rated a 'buy.'" More Resource: http://silvergolddaily.com/ Gold: http://en.wikipedia.org/wiki/Gold Silver: http://en.wikipedia.org/wiki/Silver IRA Account: http://en.wikipedia.org/wiki/Individual_retirement_account Gold Backed IRA: http://en.wikipedia.org/wiki/Gold_IRA gold, silver, gold investment, 401k, bullion , how to invest in gold, buying gold, gold stocks, why buy gold, gold ira, gold ira rollover, silver investment, investment, ira, invest in gold