Tom Peterson

Greed and fear refer to two intrinsic emotional states relating to the topic of unpredictability of . Vulnerability to those two emotional states might be a result of investors' low comfort level due to the market instability. Greed and fear relate to an old Wall Street saying: “financial markets are driven by two powerful emotions – greed and fear.” While sticking to this statement would be an oversimplification, it can also prove to be very truthful. Giving in to these emotions can have an profound and deleterious effect on investors portfolios and .

Greed is usually described as an irresistible craving to possess more of something (money, material goods) than one actually needs.

According to several academics greed, like love, has the power to send a chemical rush through our brains that forces us to put aside our common sense and self-control and thus provoke changes in our brains and body. However, there is no generally accepted research on biochemistry of greed.

Other academics tend to compare greed to an addiction, because greed like smoking and drinking can illustrate that if a person can take over one's addictions it is possible to avert bad effects from resisting it. On the other hand, if one can not resist its temptations, he can easily get swept away by it. In other words, it can be deduced that certain traders who join the business world for the emotional agitation and desire of hitting that emotional high, are addicted to the release of certain brain chemicals that determine those states of happiness, euphoria and relaxation. Before mentioned fact can also imply that such traders are susceptible to all addictions. Furthermore, humans' brains are naturally activated by financial awards, which in the same way as drugs produce an incredible but perilous feeling and thus an addictive experience.

One of the most common examples of situations where greed took over people's actions is the 1990s dot-com bubble.

The Dot-com bubble, also known as Internet bubble, referenced the speculative investment bubble that was created around new internet startup companies between the years 1995–2000. In that time, exorbitant prices of new Internet companies motivated investors to invest into companies whose business plans included a "dot com" domain. Investors became greedy, creating further greed, resulting in securities being heavily overpriced, which eventually created a bubble.

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Wikipedia