The popular television show "Monk" starring Tony Shalhoub makes light of the potentially debilitating obsessive-compulsive disorder, more commonly known as OCD.
Shaloub's excellent job in the role of an OCD-afflicted detective who at times resembles the French police detective Jacques Clouseau of Pink Panther movie fame has been a major hit for the USA Network. But if Shalhoub ever decides to leave the role, there will be no shortage of replacements.
All USA Network has to do is spend five minutes at the corner of Broad and Wall Street in New York where it will find hundreds of traders and investors who suffer from the real-life version of the disease.
Monk's role makes light of OCD, but suffering from the malady in real life is anything but funny.
OCD is a complex disorder. The obsessive portion is characterized by fears of acquiring a disease, being hurt, or harming someone. Obsessions are typically automatic, frequent, distressing, and difficult to control or stop. The compulsive aspect usually is manifested by attempts to make the obsession go away.
Recently, a television anchor led into a segment on the cooling of the U.S. housing market with a tease about looking at the latest American obsession. Although the line was delivered in a matter-of-fact style without a hint of sarcasm, it hit at the heart of an increasing problem.
The investment version of OCD is not a perfect match with the actual psychological disorder, but it nonetheless can have equally disturbing consequences.
Investors always have overdone one investment behavior or another. In the last few years, however, the process has reached absurd levels.
Alan Greenspan tried to overcome the 1990's obsession with technology stocks with his irrational exuberance characterization of the market's compulsion to buy at any price anything tech-related. Far too few investors listened. Their mania drove the Nasdaq Composite Index above 5,000 and eventually led to a roughly 80 percent drop in the index.
The Beanie Baby craze 10 years ago rationalized that a $4.99 pile of cloth and beans was worth $1,000. More recently, the real estate boom prompted some investors to do things not unlike what manic tech investors were doing years ago, which could lead some of them to face the same outcome that the tech obsession produced.
Obsessive investment behavior is so common these days it might be fair to say we obsess over obsessions.
Tying these particular manifestations of OCD together might appear to be difficult. The connection, however, is obvious: greed.
Lately, however, another obsession has overtaken the market -- speculating on what the Federal Reserve will do with interest rates. Although interest rates are an important variable in the market valuation equation, the Fed fixation is reminiscent of another fictional character, Don Quixote, whose attempt to slay imaginary enemies led him to flailing at windmills he viewed as menacing giants.
The Fed's giant role in the economy has led the market to characterize the Fed as an enemy when, in fact, the Fed's role is to provide what the market usually wants the most -- economic stability.
There are two means of treating OCD suffers. One is drug therapy. The other is generally called cognitive behavioral therapy in which a patient is deliberately and voluntarily exposed to the feared object or idea, either directly or by imagination, and then is discouraged or prevented from carrying out the usual compulsive response.
Investors again will be exposed to the Fed this week. Whether they are discouraged from reacting as usual is up to each individual. Eventually, however, investors who obsess over what the Fed does will get a dose of medicine that might be tough to swallow.
But if the recent pattern persists, even if the Fed obsession is overcome, there will be another one right around the corner.
OCD, it seems, is tough to shake no matter what form it takes. It's too bad that it now is an accepted investment approach.
