The new book shows independent investors how money anxiety causes them to lose money in the market, and how they can change that by investing scientifically and predictably
SAN FRANCISCO, Feb. 2, 2023 /PRNewswire/ — In his new book “Build Your Wealth and Keep Your Health,” Dr. Dan Geller describes why it is not investors’ fault that most of them lose money in the stock market. The scientific research features in the book shows that the human brain has two response modes – instinctive (System 1) and analytical (System 2).
“The instinctive-response mode was designed for survival in the wilderness and is not suitable to decision on Wall Street where the analytical-decision mode should be used. However, when investments are risky, the level of money anxiety increases, and the brain defaults to its instinctive-survival mode that makes flawed investment decisions,” said Dr. Geller. He is the lead author of the study Dynamics of Yield Gravity and the Money Anxiety Index, which shows that when the level of money anxiety increases, people default to their instinctive-response mode making flawed financial decisions that are often wrong and very costly to them.
The breakthrough research, which was peer reviewed and published in the Journal of Business and Economics, also show that money anxiety is the ultimate mediator between our instinctive (System 1) and our analytical (System 2) financial-response modes. Thus, when investors debate the timing of buying or selling stock, their level of money anxiety increases, and they automatically default to their instinctive-response mode.
“Since the default to the instinctive-response mode is automatic, investors have no control over it by themselves,” he said. “The only way to avoid making instinctive-investment decisions is by using a scientific model for investment in equities. By using scientific investment models, such as Scientifically Predictable, that prevents investors from making costly instinctive-investment decisions and is helping them maintain high level of confidence in their investment decisions.”
Scientifically Predictable is a monthly projection of price and return for the top five ETFs likely to increase with the highest level of statistical confidence. The projection features the price increase of each of the five ETF for the coming 30 days, as well as the projected rate of return. Additionally, each ETF price projection contains an upper and lower level limit, which indicates how high or how low the price can go in the event of an unusual economic of financial event. The monthly projection contains all the statistical analysis of each of the featured ETFs, thus no additional research and analysis are needed. Additionally, there is no need to make any repositioning of the five ETFs unless there are changes in the projection.
Dr. Dan Geller is a behavioral economist and the President of Analyticom LLC, a financial modeling firm specializing in the application of behavioral economics to predictive financial models. Dr. Geller is a pioneer in the research of financial-decision making, specifically how people alternate between their instinctive-response mode (a.k.a system 1), and their analytical-response mode (a.k.a. system 2). Dr. Geller’s behavioral economics models are used by financial institutions nationally to predict interest rates, and by investors to project equity prices and rate of return.
Dr. Dan Geller
SOURCE Dr. Dan Geller