Skip to main content

Dr. Brett on breaking the social contract

Dr. Brett Steenbarger at TraderFeed sparked some interesting discussion this weekend with his post on, "Breaching the Social Contract".

Dr. Brett offers up some examples of this breach of trust here:

"
Consider the following situations that I have encountered in recent weeks:

* A young lady in college is suddenly told by her parents that they no longer have the funds for her education. She will have to go to work to come up with the tuition. She cannot find work and doesn't know how she will graduate;

* A long-time employee of a large company is downsized to a part-time job and will be losing his benefits. He doesn't know how he will afford health care for his family. He heard about the earnings possible to traders and is considering applying for a training program that will tap him of much of his savings;

* A retired couple learns that their investment adviser has put them in volatile, high load funds that were initially described as conservative. They are stunned when they see their account statement showing a large loss in their principal, and the husband is contemplating a return to the workforce...

...In each of these cases, the individuals entered situations with expectations born of an implicit social contract. With the rending of the economy, that contract is breached--and breach brings hurt, confusion, anger, and despair. Listening to each of their stories, I am reminded of spouses who experience the infidelity of a partner: with the loss of trust, nothing is ever quite the same. It is difficult to sustain optimism and confidence in the face of doubt and uncertainty..."

I'd say that this theme, one of broken social contracts, has become an accelerating trend in our country today.

What are the causes behind these developments? Have a look at the full post and judge for yourself, or add to the discussion.

Popular posts from this blog

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and...

How to "Pull the Trigger" on Your Trading Ideas

In our last post, I quoted hedge fund manager, Jim Leitner on the importance of following up on your investment ideas.  Today I'd like to follow up and share some thoughts on how you can learn to consistently "pull the trigger" on your best trading setups and investing ideas. In order to help you do that, we'll take from the best and offer up key insights from interviews with top traders and trading psychologists like Alan Farley, Brett Steenbarger, and Doug Hirschhorn .  Now before we get to their key insights on overcoming trading anxiety and pulling the trigger on your trading ideas, let's remember what Jim Leitner said in his interview: "Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's an interesting idea" only to find out a year later that the company you could've bought shares in is now up 500-fold. You never want to say woulda, coulda, shoulda...