14 October 2009
By Patricia Kitchen
Last October, when the Dow hit 10,000 on its downward slide, many were fearful and anxious.
But when the Dow closed at 10,015.86 Wednesday, there was "a big exhale," a sigh of relief, a sense of optimism, said Duffy Spencer, a psychotherapist and management consultant in Westbury. As a result, she said, people may even loosen the purse strings and engage in a little discretionary spending, thinking, "We can afford to play now, we feel safer."
Heightened confidence is likely to come from witnessing the Dow overcome this "big psychological hurdle," said Ray Mignone, a financial planner in Little Neck. And that, he said, could lead to a little more spending, perhaps even a little more hiring.
So, why the interest? It's a milestone, and such markers, like turning 50, help people organize their experiences, said George Northrup, president of the New York Psychological Association, who is in private practice in New Hyde Park. This particular benchmark signals a possible return to happier times, he said, though he added he wouldn't make any investment decisions based on it.
Alden Cass, a Manhattan psychologist, consultant and co-author of "The Bullish Thinking Guide for Managers," said about 60 percent of those he works with are feeling more guarded. So many "went through a lot of shock and awe last year, and they haven't really recovered from that," Cass said. Cautious and gun-shy, they're expecting further setbacks, he said, before putting on the party hats.
For others, a feeling of regret could be the emotion of the day, said Denise Shull, a risk psychology consultant in Manhattan. Such might be the case for people who watched their buddies and neighbors plunge back into the market earlier this year and may now be kicking themselves for not having joined in.
But Brad Klontz, a financial psychologist in Kapaa, Hawaii, and co-author of "The Financial Wisdom of Ebenezer Scrooge," sees this not in terms of individuals' emotions, but rather of the psyche of the herd. On such an occasion "what we decide to do is based entirely on our animal brain. . . . We'll have to see what the lead horses do and assume the rest will follow along," he said.