Shall We Invest?
At one thirty eight Eastern Time the Dow Jones Industrial Average (DJIA) plummeted down five hundred points on Wednesday January twentieth of 2016. The price drop of crude oil which stood at $26.73 a barrel compared to $100 dollars a barrel just a year and a half ago has created a worldwide economic drop in The United States’, China’s, and Japan’s markets, according to a recent article in the New York Times International. Are majority of traders, investors, and exchangers are looking at this drop as a time to wait, or hold off on any investments? Or paradoxically, is now the best time to invest into DJIA?
When the stock market has its highs and lows Wall Street stock exchangers and investors alike on average are following something called a mob or herd mentality within economics. “Herd mentality, … describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items.” (Fromlet) This habit as seen within DJIA and other major Wall Street corporations is an ideology of money making. “The name of the game, moving the money from the client’s pocket to your pocket” (Wolf of Wall Street) The ideology of believing that gambling is the best way to make a six digit salary. And in ways, it can be.
Later in the day of January twentieth the DJIA climbed back up four hundred points, proving that the dip was the best time to invest, and since others saw this trend-they followed the heard mentality of investing more to send the stock back up. Due to the heard mentality and ideology this sector of global capitalism is regularly made out of fear or confidence. Confidence in the system that could drop, and make you loose all of your capital. However, there is nothing wrong with ideology and the heard mentality, but if someone is choosing to invest, it is often best to look at your options, make a decision and let the herd follow you.