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John Nofsinger is an associate professor of finance at Washington State University and a speaker, writer, and scholar on behavioral finance. See full bio

Comments on "Is the Stock Market Trustworthy?"

Is the Stock Market Trustworthy?

Are the people and institutions of Wall Street worthy of being trusted? Do you care? Read More

I don't think you can

I don't think you can consider the market untrustworthy, as most operators will tell you the tape never lies.

However, if you buy into the underlying assumptions behind the market, (e.g. it is supposed to go up, it is supposed to be safe) without giving thought to what went into those assumptions, then you're bound to be dissapointed. For example, telling yourself that you are a "long term investor" can easily remove any responsibility for active management of your account. This of course leaves you open for loss.

I think the bigger issue is whether or not you can trust yourself to adequately manage the risk involved in the stock market.

Where there is risk, there

Where there is risk, there is an opportunity. I believe it's best to diversify investment portfolios and look for long term investments to minimize risk in what you say is un untrustworthy market.

Wall Street

I agree to this article and how we seem to be more willing to forgive when we are making money because what do we care as long as we are getting money. We get too caught up in how Dow Jones or Nasdaq is doing that we don't pay attention to the news. We get too caught up in Wall Street.

FIN 325

For got to put the subject as FIN 325

FIN 325

forgot*

Trust, not exactly

I don't trust the stock market at all. I believe it is somewhat better than gambling. That is not to say I am against having a portfolio in the near future. I think it is stupid to have most of your money in the stock market unless you have a long ways to go till you retire - 10 years at least. I wouldn't trust them even if scandals weren't surfacing on a regular basis.

Fin325

To me I never had positive feeling toward Wall Street particularly after economic meltdown. I don’t have any truth on Wall Street and I don’t think that I will ever invest to that location. But the bad thing is what ever happen on Wall Street it would affect all ordinary people who even don’t know what Wall Street is.

Trusting the stock market

I think that this states the trusting of the stock market very well. People are always willing to trust something until there is a reason not to. When stocks are providing a positive return then of course people are going to trust them. However, it's when they start to decline in value that people get upset so it's a double edged sword. The stock market is a risky way to invest money and always has been so if you are going to accept the risk then one must be willing to accept the consequences if they arise.

Well, trustworthy is important

Hi Everyone,
I think trust is very important; the problem is people sometimes don't do deep assessment of the business activity they want to involve in. Moreover, they want to accept uncertainities and risky situations in times of bad business circumstances like what we are experiencing nowadays. I think handling and solving business problems is very important.

I don't trust wall street. I

I don't trust wall street. I know that people encourage us to invest while were young because of the payout when were older but I have a hard time seeing myself investing money because of all the scandals that have happened and due to how terrible the stock market is right now. I think peoples behavior have a great impact on the stock market performance. Both seem to affect the other.

I am not surprised that

I am not surprised that people act more unethical when they are making money. Thats just our nature. But I don't no if i can trust wall street, with scandals that go on and the urge for people to do whatever it takes to make a few bucks it's risky, but you have to be willing to take risks to succeed, so i will still invest but will be as cautious as possible.

Fin 325

I don't think anyone should trust the stock market without doing some investigating of their own. The financial officers of most of the companies are going to do everything they can to make their company look like it is doing as good as possible whether it is or not. Some of them are even braking the law to do this as seen in all of the scandals and bankruptcies that have happened in recent years. If they get more people to invest in their company then they get more money and people are going to invest in companies that look like they are doing really good.

FIN 325

I actually do not trust wall street at all. Stock market forengin exchange, and other money market are all same as gambling. In addition, there is no warranty to invest stock market.

fin 325

When evaluating my trust of the stock market, both ethical behavior of companies and performance of the market concern me. When it comes down to it though, the performance is what really drives investment. Yes, ethical companies are more likely to be successful in the long run but many investors are just looking for the quick buck.

Fin. 325

I think trust does have something to do with investment, at least for me personally. I would not invest my money in a place that I didn't trust. But that's mostly because I don't have a lot and every little bit matters. But I also liked what was said about the market that unless the market is doing bad, people don't care if the money is being invested unethically, as long as they're making money. I don't think that's the best way to handle your money, because it can never end well.

It is very interesting to me

It is very interesting to me that although there may be financial scandals and corruption uncovered it doesn't seem to deter investment as much as one might think. I guess if a large scandal hits it has a limited effect if the rest of the market is performing well, makes you think.

Fin 325

Do I trust that all people on wall street and businesses will act ethically and morally? no. but a few bad apples won't stop me from buying one or two out of the bunch; only after i closely scrutinize them for bruises of course.

Fin 325

I am not very familiar with the stock market, but from what I see it seems to be similar to gambling although one can make more educated decisions in the stock market than they could at a casino. Since I am not a very trusting person and I am a mathematics/statistics major I would rather take my chances at Blackjack and card counting.

Fin 325

I don't trust the stock market. My uncle lost over 200K in November I think it was. I will put my money in bonds because the US government is more reliable.

Fin 325

First of all I think we all understand that the Stock Market is not a living, breathing being. It is not capable of deception. Then the question is are the companies trustworthy? Are other investors trustworthy? And the answer is a simple "no".

However it is crucial to understand all types of investment involves risks. You can hold onto your cash but even by investing your cash underneath your mattress you face the risk of theft or if a fire blow through your house could well destroy all of your savings. Not to mention the effect of inflation, although very small during one's life time, will decrease your purchasing power over time.

So between investing and not investing, it is obvious to invest. Now for those of us who are less adventures, the question becomes the U.S. government trustworthy? Although probably not the best question to ask during these times, the point is U.S. Treasury Bonds will be great investments.

For those of us who are more ambitious, the untrustworthiness of the stock market will NOT lure us away from it. The key is careful portfolio management, recognizing the bullish market and when it ends, and do NOT hold your investments in stock markets for prolonged period of time.

FIN 325

i won't try to invest that much in stock market, since it is very hard to determine the stock market will rise or decrease. Therefore it is not the reliable. It may be a good chance for me to earn money, however it may also cause me lost all my money

FIN 325

The stock market could be your friend to help you make profit but also could be an enemy which makes you poor in a night. To play carefully and find your role in the stock market is very important. To me I trust the stock market but it is not forever because things changing every second.

Finance 325

I do not trust the businesses that make up wall street. For every 10 trust worthy people there is always that 1 who is not. This 1 person can easily ruin it for the rest. However, just because I don't trust all businesses, doesn't mean I don't see the need to invest. In good economic times, its easy to oversee the non trust worthy. In an economic crisis,they stand out like sore thumbs. Investing your money in any old stock is stupid, but researching, knowing, and trusting the business you are putting your money into will commonly please the average investor.

Fin 325

I think a big key to trusting the stock market is to realize the tendency of people to turn a blind eye to bad investing practices when they are getting short term returns because of them. Money is the best medicine to many people, so the more they can get now, the more poor investing they will do. It's important to not just take the word of someone else when investing, but rather research what you're investing in for yourself.

No I dont trust the stock

No I dont trust the stock market. I have never invested so i can think of the stock market as a stranger. I dont know this person, it wants my money, Ive heard hundred of horror stories about them, and again they want my money. I guess I believe that most of my mistrust is not for the actual market itself, but with the unethical behavior of those involved in it currently.

I would love to trust the

I would love to trust the stock market but seriously, who can you really trust? Bernard Madoff was a well respected and trusted figure in the business world.

FIN325

I am a person that takes relatively small risks and I would say the stockmarket is definitely not trustworthy. It is way too volatile for my liking. The market changes so drastically everyday that i just can't find myself being ok with investing in something so risk. I would have to investing things with little to no risk.

I don't know if I trust Wall

I don't know if I trust Wall Street. I think on a personal level I would say no, but because they deal with such large amounts of stocks and money and peoples lives I would have to say yes. We only ever see the negative sides of the market and whenever something is bad...it's REALLY bad and on the news and media everywhere we look. We never see the good stories about people making a killing and doing really well and how their investments changed their lives. This is how it seems to be with anything though, the media bias toward negative emotions. If we can't trust Wall Street then what do we do?

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