They have been weighed and found wanting 08/26/2010 6 Comment(s) Jobless claims rise more than expected NEW YORK | Thu Aug 19, 2010 Reuters 12:21pm EDT
Jobless claims slide more than expected
By Hibah Yousuf, CNN staff reporter August 26, 2010
Economists delegitimize the word "expect" and its derivatives. Drama, especially as it relates to fear, is the key to driving markets. Buy! Hurry! Sell! The Dow rises above or falls below key psychological levels (e.g. 10,000, 9,000, 11,000, whatever ,000). Wait?! You don't have gold as a key element of your portfolio?!! You're going to die. Check out today's MSN Money article on Glenn Beck for a fine example.
Unrealistic expectations are dangerous. They set us up for disappointment, and even deep hurt, in all relational aspects: relationships with our parents, kids, spouses and friends; relationships with our employers, colleagues and peers; even relationships with our money and investments. We all live with expectations, but I submit we may be better off without them, especially regarding issues of finance.
Take, for instance, Pip, Charles Dickens' protagonist in Great Expectations. Pip was a lowly orphan who grew up with fear, guilt and shame. Yet, through a burning desire to win a young, wealthy girl's heart, he entertained aspirations of becoming a proper English gentleman.
When Pip unexpectedly inherited a large sum of money with an anonymous benefactor, he moved to London immediately and embarked upon a journey to achieve his objective to attain wealth and gain social status. However, time and again as he moved towards achieving his objective, Pip's great expectations met with disappointment and heartache, ultimately compelling him to reach the following conclusion:
"We spent as much money as we could, and got as little for it as people could make up their minds to give us. We were always more or less miserable, and most of our acquaintance were in the same condition. There was a gay fiction among us that we were constantly enjoying ourselves, and a skeleton truth that we never did. To the best of my belief, our case was in the last aspect a rather common one."
What I'm driving at is that there's a significant difference between setting objectives and goals and having expectations. Setting an objective to graduate from college and a goal to graduate at the age of 22 is not the same as having an expectation to graduate from college at the age of 22. Regarding the former, if you graduate from college at the age of 24, you missed your goal but achieved your objective; in that latter, you failed your expectations, even though you succeeded.
So what is happening when the media shows people lining up outside of banks, hoping to withdraw their money before the bank goes bankrupt, or when reports quote investing "experts" claiming stocks are nearing a financial Armageddon level, or when somebody is screaming for you to buy a certain stock or commodity? They are creating an expectation through images of panic, pain and ruin, which fuels fear. And as we know, fear sells, both investment vehicles and media. Fear buys. Fear drives people to seek cover. And, more often than not, the people peddling fear have something to gain from your reaction to your fear.
To combat this, expect to get through these times, perhaps with the help of family, friends, a Faith-Based Organization and/or the government. Expect to have a decent life full of people who love and care about you. Expect to remain calm and objective. Send the prophets of doom a calm, collected and carefully reasoned response they're not expecting to hear. No Fear!!!
Causes Tom Wagner Supports
AMFA Foundation, Affordable Medicines For Africa-South Africa, World Vision