Mind Over Money: Nova (2010) is a documentary by director/producer Malcolm Clark about the latest research studies on behavioral economics. Scholars discuss their findings, which are often at odds with established economic models, and a number of experts are interviewed. It features Leo Melamed from the Chicago Mercantile Exchange, Richard Rosenblatt from the New York Stock Exchange, Joe Mazzella from Knight Capital Group, Dan Mathisson from Credit Suisse and Jeremy Grantham from Grantham Mayo Van Otterloo.
Emotion may lead you to make bad financial decisions. For example, people who feel sad will pay more, sometimes four times more, for a consumer product than those who do not feel sad.
Dan Mathisson (Credit Suisse): “The market is an aggregation of what thousands of people think the future is going to be like. And if these people are optimistic about the future, the market goes up, and if people are pessimistic about the future, the market goes down. But at the end of the day, the question the market answers is, ‘Are people optimistic or are they pessimistic?’ And that’s a psychological question. Emotion still drives the markets.”
Narrator: “Grantham believes [economic] bubbles are inevitable and have a predictable rhythm.”
Jeremy Grantham (GMO): “It’s euphoria causing the price to go up and realism causing it to fall back, and then, eventually, unrealistic panic, as it begins to feed on itself, and the lemmings head in the opposite direction.”
- Jeremy Grantham Warns About The ‘Most Important Quasi-Monopoly In Economic History’ (businessinsider.com)