"Animal Spirits" a term coined by the British economist, John Maynard Keynes in 1936
What are Animal Spirits?
The technical concept of spiritus animalis can be traced as far back as 300 B.C., in the fields of human anatomy and medical physiology. There, animal spirits applied to the fluid or spirit present in sensory activities and nerve endings in the brain that resulting in mass psychological phenomena like manias or hysterias.
Animal spirits also appeared in literary culture, where they referred to states of physical courage, gaiety, and exuberance. The literary meaning implies that animal spirits can be high or low depending on an individual's degree of health and energy.
Today, animal spirits describe the psychological and emotional factors that drive investors to take action when faced with high levels of volatility in the capital markets. The term comes from the Latin spiritus animalis, which means "the breath that awakens the human mind." In some ways, Keynes' insights into human behavior predicted the rise of behavioral economics.
The psychological and cognitive factors that can affect the economy and the financial markets
The five animal spirits are psychological and cognitive factors that can affect the economy and are described as:
Confidence: The cycles of optimism and pessimism that can amplify disturbances in the economy
Fairness: A motivating factor in decisions like setting wages and prices
Corruption: The role of corruption and bad faith in the economy
Money illusion: The tendency for people to ignore the effects of inflation or deflation
Stories: The narratives we tell about ourselves and the power of political or media stories to move markets
THE BOND BUYER
By Jessica Lerner
EDITOR'S PICK
Rising rates
“We've had an unprecedented era of low rates," said Stephen Akin, founder of Akin Investment, a registered investment advisor.
"Inflation really could get away from the Federal Reserve; it's not out of the realm of possibility.
Strategies for investment success in 2025 and beyond
As the year comes to a close, here are a few strategies that will help you set yourself up for investment success in 2025 and beyond.
A few year-end steps – like completing your retirement plan contributions or distributions and making charitable donations or gifts – can help prepare you for success in the coming year and beyond.
Tax-loss harvesting may help you offset capital gains taxes, but you should keep the wash sale rule in mind.
Registered Investment Advisors are fiduciaries, meaning your interests always come first. You will have a continuing relationship with your RIA. An RIA must register with the SEC or state securities regulator, depending upon the assets under management.
Financial Planners help individuals and corporations meet their short-and long- term financial goals. Services include asset allocation, estate planning, tax planning, retirement and more.
There are several methods by which you might pay an investment advisor, including a fixed fee, an hourly fee, or a percentage of the value of your assets they are managing.
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Firm Profile: Akin Investments, llc CRD# 281450
Individuale Profile: Stephen Herbert Akin CRD# 1104380
39 Years in the business
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