Finance
Finance deals with money and risks. It also involves the concept of time in growing your money. For money to grow, it has to be invested whether in certificates of deposits or invested in a business. In whatever form, finance covers a lot of categories such as that of personal finance, corporate finance, banking finance and economics finance. For some, it is considered an exact science when mathematics of investing is involved. However, a lot of finance is often considered as an art since not all knowledgeable in finance make good on their investments. In fact, a lot can go wrong in finance too despite all the precautions and risk mitigation that investors take with regards to their money.
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A lot of the science and art of finance entails human psychology. A prime example is the current financial turmoil in the U.S. finance markets which is in prime time TV news. Many venerable icons of financing such as Bear Stearns, Lehman Brothers and now AIG or the American Insurance Group were being taken over by rivals or by the U.S. Federal Reserve Bank to avert a global financial market collapse. Even Merrill Lynch which is one of the largest investment and brokerage firms was bought out by Bank of America. It is maybe inevitable that these things happen due to a quirk in human psychology- one which former Federal Reserve Board chairman Alan Greenspan calls as “irrational exuberance”. A lot of prudence went out of the window in the pursuit of profits with the resultant excess in mortgage lending pushing these firms towards bankruptcy. In a market as volatile as now, the so-called “herd mentality” is clearly evident among jittery investors which usually leads to “bank runs”. The timely rescue is to forestall further damage to the investing public and prevent a wider market collapse in financial markets worldwide. It is obvious that these financial advisory firms did not follow their own advice they give to their clients.