What Bond Movies Can Teach Us About Volatile Markets

You're basically watching a movie. You just don't think of it that way.

You cheer during the good parts, lose interest during the slow parts, and occasionally get the living hell scared out of you.

The funny thing is you actually know how it's going to turn out in the end. But that doesn't stop you from "getting into" it.

The movie is called "The Market" and it show times are M-F, 9:30 AM through 4 PM (EST).

Okay. It's not technically a movie. Nobody's selling $12 popcorn and it doesn't have Ben Affleck in it or anything (thank God), but a suspenseful movie is a good way to conceptualize the process of market-watching.

Take James Bond movies, for example. When we watch a Bond flick, we know what we're getting. He's going to use some cool gadgets, drink a martini, save the world, "get the girl", etc.

But there are periodic moments in which 007 appears to be in mortal peril (inordinately involving buzz saws, lasers, and exotic predatory animals). If we've been following along, if we're "into it", we experience an unavoidable emotional reaction - anxiety, or as the movie business euphemistically dubs it, "suspense".

We can't help it. We experience this suspense because we follow the story not just with our eyes, but with out brains, and that means we follow it on an intellectual and an emotional level.

In fact, it's almost as if our emotional brain and our intellectual brain watch the movie on a couch together and during the suspenseful parts, wrestle for control of our heads.

Sometimes the conversation looks like this. Watch the following classic clip from Goldfinger to really provide the context.

Emotional Brain (EB): HOLY CRAP! HE CAN'T ESCAPE! THE LASER IS GONNA SAW HIM IN HALF!

(Note: The Emotional Brain not only speaks in exclamations, it uses all "caps".)

Intellectual Brain (IB): I say, get a grip, dear boy! It's a half an hour into a 3 hour movie. He'll be fine. Stiff upper lip and all that.

(Note: The Intellectual Brain is not only the voice of reason, it has Victorian accent.)

EB: BUT, BUT! HE CAN'T REACH HIS MAGNETIC PEN KNIFE!!! HE'S SCREWED!! AAAUUUGH! I'M HYPER.. VENTILATING...!!

IB: Yes, yes. Dire straits, indeed. But we know full well that Daniel Craig signed a 3 movie deal. Can't just dispatch him in the first one, now can we? Wouldn't be cricket!

EB: ARE YOU NUTS?? ARE YOU BLIND?? THE LASER IS ALMOST UP TO HIS - OH, MY GOD, I CAN'T EVEN SAY IT! MAY DAY! MAY DAY!

IB: - All right, lad. I suppose a bifurcated John Thomas is more than you can bear. No talking you out of it. I'm going to send a neuro signal to the hands to cover your eyes. But hand me those pretzels first, old boy. You're getting crumbs all over the Persian rug, don't you know.

EB: SORRY!!

Now, it should be said, we have enough data on James Bond and on the major market indexes to know what happens in the long run. But when we're watching the movie, we're not in the long run. We get drawn into the emotions of the moment and we struggle, sometimes in vain, to restore a big picture perspective.

The above conversation is essentially what our psychological defense mechanisms look like when we watch a movie or when we watch The Market. The tactics are certainly the same. Get us out of the "moment" (short term) and refocus on the big picture (long term). Supplant emotion with reason, fear with facts.

And sometimes when we can't reframe from a short-term to a long-term perspective, we simply cover our eyes (i.e., we stop watching). It's an excellent last resort tactic that is underutilized.

So enjoy your thrillers, if that's your thing. And enjoy your Market watching. Just remember what it is your watching, and retain that ability to pull yourself up out of that short-term emotional tailspin. Because you will get draw in and it will happen without your awareness (just like in a movie).

And if you insist on watching scary movies, in the name of Freddy Krueger... do NOT watch them alone.

MPI www.marketpsychinsights.com has client assessment tools and practical advice that can even help manage clients who thought Finding Nemo was a "nautical thriller". Reach out to us at info@marketpsychinsights.com for more info or a free demo.

And hey... be careful out there.

-Dr. Frankenstocks

Frank Murtha, Ph.D.


MarketPsych is the premier Investing Psychology Consulting firm. We do talks, keynotes, workshops, training, coaching, consulting with out clients. They are consistently rated as highly educational, professionally valuable, and fun.

Originally published here. http://blog.marketpsych.com/2010/03/do-you-like-scary-movies.html

(Image from Goldfinger used with permission from MGM Licensing).

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