Stock Market: Jekyll and Hyde Behavior


March 12, 2021 | AtoZ Markets – It may be an unusual sight for people that a pop-culture staple and iconic novel piece by Robert Louis Stevenson in the finance and stock market, best believe that it is an actual term for their particular behavior.

Stock Market Behavior

Strange, unpredictable, and surprising may be the perfect terms when we talk about stock market behavior. No one can tell how they are going to behave next. They may be constant now; before you know it, they are already skyrocketing and spiking and then crashing down the next thing leaving all your hopes down the drain. It’s all about fluctuations and volatility in this type of discussion. But fortunately, there is good news: you can never actually predict numbers, but you can always try to understand by studying and monitoring how individual stocks and vast markets as well.

Jekyll and Hyde Origin

Sometime in 1886, the Scottish author Robert Louis Stevenson published a gothic novel entitled “Strange case of Dr. Jekyll and Mr. Hyde.” The story is about Gabriel John Utterson, and an old friend of his Dr. Henry Jekyll and his evil alter ego Edward Hyde. Dr. Jekyll is a good-natured and well-respected scientist. He wanted to bring out his second personality and the darker side of science, which is why he tried to experiment himself in a laboratory. He showcased a case of a split personality of good and evil.

Split personality

A split personality is a dissociative identity disorder, a type of mental illness when a person manifests two or more different and distinct personalities. You may distinguish the people with somewhat other characters, thoughts, and feelings in just a single body since they are noticeably contrasting. Childhood trauma is almost always the cause of this disorder.

Comparing the stock market and the novel

We may say that the stock market also has a split personality like Jekyll and Hyde. Jekyll can be the good side of the market, portraying qualities like gentleness, ease, and ample profit and revenue possibilities. While Hyde can represent the bad market area with rates such as unsteady, predictable, and hurtful to hopeful investors, leaving them high and dry. While humans express various emotions, it is highly likely that these emotions also affect the stock market. How can this be explained?

Behavioral Finance

Behavioral Finance is a brand-new field study and research that solely focuses on explaining how human behavior also concerns the very same behavior of the stock market. There is a term called efficient market hypothesis (EMH) or efficient market theory that all information reflects share prices.

Behavioral Finance also explains that an individual person’s decision making on a daily basis be it logical or unreasonable makes an insane reflection on the market, let alone the decision of traders collectively. For example, a large group of people decided to become Mr. Hyde becoming selfish and starting to hoard today, there will be an uncontrollable inflation which will sooner or later explode. This will cause nothing but anxiety and fear.

Source: https://www.investopedia.com/terms/j/jekyllhyde.asp

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