April 7, 2014

Believing is Seeing

“What you believe is what you see” ~Brian Eno

Who needs a Rorschach-style ink blot personality test when we have the U.S. stock market?

Looking at the S&P 500 chart since the March 2009 market bottom, (below left), what do you see?

Many of us are “glass-half-full” types. We see a beautiful vase of flowers in the ink blot below. We also believe the economy is heading in the right direction and that the stock market rally should continue for as long as conditions remain favorable.

Believing graphic

For those of us who are “glass-half-empty” types, the above ink blot might look more like an animal skull.  We worry that stock prices have shown relatively little volatility in recent months — an ominous sign that investors have become complacent and are underestimating risk.

Like taking an ink blot test, investing can be a tool for self-discovery. In future posts, we will take a closer look at some of the underlying personality characteristics and beliefs that can color an investor’s views.