Salient to Investors:

Joseph Engelberg and Christopher Parsons at University of California at San Diego found:

  • A 1-day drop in equities of 1.5 percent is followed by a 0.26 percent increase in hospital admissions on average over the next 2 days, and that the impact on psychological conditions such as anxiety or panic attacks is even stronger and more immediate, with admissions jumping twice that much in one day. Admissions jumped more than 5 percent after the Oct. 19, 1987 crash.
  • The effect of a large market drop is twice as strong during periods of low volatility because extreme returns are more surprising to investors as expectations are set by what one experienced in the recent past.
  • People are affected by the prospects of local companies as much as they are by the fate of firms in other regions. Both California returns and non-California returns send Californians into the hospital, and even people who do not own stocks suffer from a market drop as they see their own economic prospects dim.

Lisa Kramer at the University of Toronto said research links stress and health: studies show a higher risk of depression after earthquakes, increased anxiety-related hospital visits after 9/11, and more anxiety-related admissions during wartime. Kramer cited a significant correlation between a period of stock-market decrease and heart attacks during the 2008-2009 financial crisis.

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