People who experience seasonal depression make a definitive effort to avoid financial risk-taking during autumn.
As the the days get shorter and the nights draw in, their risk taking diminishes ......contributing to market crashes!
Lisa Kramer, professor in behavioural finance at the University of Toronto's Rotman School of Management states that we now have clear evidence of a tie between pervasive market-wide seasonal phenomenon and individual investors' emotions.
About 10 per cent of the population suffers from severe seasonal depression, known as seasonal affective disorder (SAD). Even those who do not suffer from SAD still experience some degree of seasonal fluctuation in mood.
In a controlled study, inviting participants to chose either a high risk investment with potentially large gains but comensurate losses, the study established that participants who experienced seasonal depression chose more of the guaranteed payments and put less money at risk in winter, but their risk tolerance came more into line with other participants' in summer!
If you are suffering from depression or know someone who is, contact local Guildford counsellors Take Control.
Steve Thomerson has many years experience dealing advising and supporting people with all types of depression.
