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Are Investors on Drugs?

By March 2, 2013October 26th, 2020No Comments

No, really, I mean it. Are investors on drugs? Scientists say that the level of oxazepam, a drug commonly used to treat depression, is creeping up in our waterways. You see, when patients consume these drugs, the drugs themselves pass through into the water system. Waste water plants are unable to remove these chemicals and so they have nowhere to go. Therefore the worldwide levels are increasing.

This means that you may not be taking mood altering drugs yourself, but you are ingesting them every time you take a drink of water.

What’s the connection with investing?  Science magazine reported in its February 15, 2013 issue that fish, when exposed to a level of oxazepam that is commonly found in waterways, became higher risk takers, ventured into unfamiliar environments more willingly, and became much greedier and more efficient feeders than those fish not exposed to the drug. The concern is that theymight wipe out other necessary species, or make themselves more vulnerable to predators.

Are investors doing something similar?

First, let’s look at the big players. Were you aware that 2013 is shaping up to be a year of Mergers and Acquisitions the likes of which we haven’t seen in years? Some $160 billion of mergers have been announced so far this year, and I’m writing this on February 16th! Talk about efficient feeders. Companies are gobbling each other up at a rapid pace.
Are there factors besides rising levels of anti-anxiety medicine? Of course, there are several. One of which is the ocean of cash sitting on corporate balance sheets. But this notion of increasing drug levels deserves careful monitoring. My guess is that the canyons of Wall Street give rise to the use of anti-anxiety medicine like few places on earth. I can’t prove this, naturally, but who would disagree?

Next, let’s look at us regular folks. Most importantly, I’m concerned that my children and grandchildren are going to live in a world that is increasingly influenced by the mass ingestion of mood altering substances, no matter how unintentional. But beside that, will this modified behavioral pattern affect every aspect of our lives? Since my life’s passion is helping people work toward their goal of making their money last a lifetime, I worry. Will retirees take on more risk, “under the influence,” if you will? I sometimes see investors take their life savings and trust it to a website that claims to provide superior investment performance. Or they will read an article in a magazine and risk their capital, the money that will be needed to put food on the table, on something that may or may not be a wise investment.

Barron’s magazine, among other notable publications, has been drawing a connection between the increased levels of oxazepam and similar chemicals with investing for several years. Maybe they’re on to something.

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Note: The opinions expressed in this material do not necessarily reflect the views of LPL Financial.