How Is A Horror Movie Like The Economy And The Markets?

I am not a big fan of scary movies.  You know, the ones with the guy in the hockey mask or the girl with the head-spinning thing; that’s just not for me.  If I’m honest even just typing those words made me cringe at the memories of seeing those scenes.  But there’s an analogy going on between those films and the economy and the stock market.  Bear with me, and I’ll explain (hint: it’s not scary).

In those movies, there is a point in which you realize something really, really bad is about to happen.  It’s that “oh boy, this is going to be very terrifying” type of moment.  Physiologically, some people might experience an increase in heart rate, dryness of mouth, eyes watering or goosebumps.  The emotion known as fear is palpable, and we’re anticipating something but we have no idea what to expect.

Some would say (I can’t) that the best horror film keeps this feeling “alive” in you for as long as possible–drawing you in, and keeping you engaged and fearing the absolute worst.  Then there is that point that we’re let in.  We see the monster, or the face, or the ‘thing’ coming out of the TV and it’s in front of us.  It’s at this point that something begins to change.  It might be scary, but we know what we’re facing now–it’s in front of us, and there’s almost a sigh of relief as we begin to adapt to a new phase of the film.  Some might say “this isn’t really that bad” and the heart rate returns to a more normal pace and the goosebumps subside.  Things still need to be dealt with in the movie, but we at least know what we’re dealing with.

How are the economy and the stock market similar to this?  > SEE MORE

Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor