Graduation Year

2023

Date of Submission

12-2022

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Psychology

Second Department

Economics

Reader 1

Ronald Riggio

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2022 Luke S Field

Abstract

This paper examines the impact COVID-19 has had on investment psychology. Particularly, the paper addresses different potential impacts the pandemic had on investors’ attitudes and psychology toward making new investments. Using behavioral finance and investment psychology research, this paper examines case studies for two significant economic events that shifted investment psychology in some shape or form: The Dot Com Bubble in the early 2000s and The Great Recession lasting from 2007-2009. First, there is no set way of investing that is successful across industries and different economic climates due to the volatility and unpredictability of the market. Second, investing has drastically changed over the past few decades due to advancements in technology, specifically handheld devices. And third, successful investors often rely on a company’s financial information and don’t become overconfident if their investments were successful in previous periods. This paper concludes that investment psychology and behavior have constantly been changing and will continually change. The recent pandemic served as a direct way to observe these differences. The pandemic caused most stocks to plummet because of the uncertainty surrounding the overall economic climate. In conclusion, investment psychology negatively impacted the American stock market because of the pressure the pandemic placed on investors.

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