The ups and downs of stocks and life

November 12, 1997|By Andrew Bard Schmookler

THE STOCK market, it is often said, is fueled by two basic human emotions: greed and fear. Greed leads people to venture into the market, driving prices up. Fear makes people bail out of the market, driving prices down.

Though it sounds rather symmetrical, a close look at the stock market charts reveals that between greed and fear there exists a fundamental asymmetry. At their maximums, fear is the more overpowering of the two emotions.

In a panic

What is ''panic'' -- a word long applied to market crashes -- but fear in its purest form? Although there can also be buying panics, such a buying spree (as in recent days) is usually the bounce that follows a selling panic, and it entails a climb somewhat less precipitous than the preceding drop. In market history, the largest percentage moves in a single day have been downward moves.

The market's great rises are long and protracted; its crashes are often sudden and sharp. One often hears how a single day of steep decline has wiped out months of previous gains.

Fear acts cataclysmically, greed is generally a slow and steady motivator. Something similar is found in the relation between pain and pleasure. It is much easier to create overwhelming pain than overwhelming pleasure. Any fool with a rock or a stick can inflict pain so intense that one would be desperate to avoid it, so unbearable that there is scarcely a moment in a lifetime so pleasurable that it would be worth enduring a moment of such pain to get.

This more dramatic and decisive nature of the negative feelings should not be misunderstood as proving that the negative is more important in our lives than the positive. It is only that the two aspects of our experience are orchestrated differently. This asymmetry in the way our organism orchestrates different experiences is a mirror of a fundamental asymmetry in the order to which we are adapted. It is in the nature of the world we live in that destruction can be quick and sudden, while construction is a slower and more gradual process.

If you've ever seen a film of an explosion run backwards, you can grasp this asymmetry: The rewind version, in which the smithereens come flying together into an intact form -- is entirely implausible. A saying has it that it can take but a moment to destroy what has taken years or centuries to build. An earthquake or a bomb can level a city in seconds. A bullet can snuff out a life instantly. Compared with order, disorder is easily created.

Being built to survive in such an asymmetrical reality, our experience of what threatens our existence is qualitatively different from our experience of what sustains it. In a world where death can be sudden, we're well-served by the capacity for overwhelming fear and pain. In a world where the creation of the orders that sustain us -- such as good health, loving relationships, coherent societies -- take a long-term, ongoing effort, we are also well-served by a quieter, steadier experience of life's pleasures and positive desires. (We call our pleasures simple, but they rest upon an order of great complexity.)

This is why, when looked at as a drama, life may seem to accentuate the negative. Not only is the stock market more dramatic in its crashes than in its up days, but also in other ways it is loss and conflict -- not happiness and harmony -- that make up our headlines.

There's a cartoon in which an 18th-century French physician returns home and announces to his wife, ''Today, the great author Victor Hugo was born.'' What makes this funny is that Hugo's birth would have seemed at the time no more newsworthy than that of any other baby.

In recent months, headlines around the world have announced the deaths of many notable people -- for example, Jimmy Stewart, Princess Diana, Mother Theresa. But there's been no equally big news about births. Yet doubtless, people who will be just as valuable as those recently deceased have been born in this time. It's just that their value will take years to develop and become visible, while the loss of value represented by death occurs overnight.

Constructive process

The asymmetry between the processes of construction and destruction is why, when a news bulletin interrupts our regular TV programming, it's almost always an unpleasant surprise. It's a tornado, not the sun shining, that interrupts the program. Peace breaks out much more rarely than war. And a million happy families living harmoniously do not get the space in the papers of just one destroyed by a murder-suicide.

It's not that life's a bummer, but rather that the things that seize our most intense attention -- news and drama -- focus on that part of reality where change is most sudden. Most of the time, in our lives, no news is good news. We're built that way because we're structured to survive in a world in which life's development and life's destruction are subject to having very different looking charts: the long ascent of life's bull market, the steep decline of its crash.

Thus, it is that with a stock market driven by greed and fear, Wall Street's most famous days will be down days.

Andrew Bard Schmookler's latest book is "Living Posthumously: Confronting the Loss of Vital Powers'' (Henry Holt).

Pub Date: 11/12/97

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