At a time when world stockmarkets have retreated rap-idly downhill and are peering over the cliff edge, perhaps it is also time to reflect on investor psychology and what has driven us to the extremes we have witnessed in recent times.
Stockmarkets have become ever more sophisticated since the great South Sea bubble but the basic principle remains that they are based entirely upon the opposing aspects of greed and fear.
It is interesting to see the present predicament, where an excess of the former has created an abundance of the latter in most world markets.
Conversely, when it comes to the residential property market, we are completely at the opposite end of the spectrum, albeit that the market may even now be passed its peak and that the trough will be (hopefully) nowhere near as extreme.
There are still grounds for disappointment and it is to be hoped that the pain of the early 1990s is not repeated. Memories are short and the inflated values in certain sectors could well cause hardship with perhaps new City Centre flat developments being the prime candidate.
It gives no comfort to those of us who were concerned about “high-income” products five or six years ago to see the chasm that investors may now face, having been attracted (missold?) on the basis of double-digit figures.
An efficient free market economy is always going to cause these sorts of excesses and the greed among certain fund managers has cau-sed more harm to the investment management industry than they will perhaps ever realise but then where did over-inflated egos ever cause a moral dilemma for that type of individual.
The chickens have certainly come home to roost for corporate America and one wonders whether the legal procedures in the US will ever result in certain individuals reflecting upon their deeds in the surroundings of their comfortable cell.
One sees the same greed factor among consumers who, above all else, must have the branded goods and it is fine for those who want to pay for them. But there are a significant element of those who cannot afford such possessions who will resort to crime to obtain these designed items which, of course, puts up the crime rate.
I was particularly struck by the fashion victim mentality when seeing ads for the latest Mercedes CLK. Personally, I do not think I shall ever be old enough to want to drive behind a pointed star but recognise that the brand has a significant following in many walks of life.
The statement on the ad: “Item one on the pre-nup” struck me as being a classic example of endeavouring to promote a possession as being the most important aspect of all, which is extremely sad.
We have all witnessed the demise of football and Form-ula 1 motor racing from being sporting events to number-crunching exercises driven by excessive cash. This is ano-ther example of greed overtaking common sense.
It would not do for us all to be the same and there will always be inequalities in life and rich diversities but a general acceptance of a greater sense of responsibility, particularly by those wielding influence, would be an excellent goal to aim for.
This would trim back excess and bring about a greater degree of stability, particularly to stockmarkets. On the other hand, I am sure that Utopia will never be found.
Nick Conyers is director of Pearson Jones