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Psychological Contagion

Having dealt with the Coronavirus now for over 6 months, and entering flu season, we are quite familiar with a viral contagion. They spread quickly and we can’t always tell who has it.

Thankfully, we have precautions we can reduce the likelihood we catch a viral contagion such as regular hand washing, wearing masks and staying a safe distance from others. But they aren’t the only contagions.

There are also psychological contagions, which is when we are influenced to feel, think and behave like others. But with this contagion we know exactly who is carrying it.

 Individuals that are in heightened emotional states and the financial media are carriers of such psychological contagion. Similar to viral contagions, we can take precautions to stay safe and reduce the likelihood they infect us.

 We can keep at a distance from those sources. We can recognize how the message may be biased and understand the financial consequences of behaving like them. And perhaps the best precaution is me, your advisor. I am here to guide and advise, especially during these difficult times.

©2020 The Behavioral Finance Network. Used with permission

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