So are financial decisions in capital markets complex? Should we consult experts to make clever investments?
The truth is that there are many people who’s job is to understand capital markets but as the markets are truly chaotic, they have the same chance to perform their job well as a ice cube can survive in hell. We just do not know what will happen in the next few months as we do not know what people are up to: some people sell and some people buy, for various striped reasons.
Decisions are subliminal. We do not know why we really like a glass of Coca-Cola, we just do. In fact it is a matter of survival. Historically, people that made clever eating and drinking decisions survived and people that did not died. So the survival genes favouring certain behaviour are with us today.
The thing about decisions are that they are deep down in our heads. And they happen without giving us a chance to control them. The same goes for financial decisions. We invest in things we like; in fact we make sure the arguments are there to back up our decisions.
All decisions we take are emotionally based and in arrears we create logical arguments.
The company that are well liked have brand equity relating to their products just like their listed shares. In finance the brand equity could be referred to as financial branding, we want to be shareholders.
So are the decisions in equity more complex? Not at all; you need a pinstriped suit if you would like the world to think that they are really difficult and important.