by Simon Maierhofer
The ‘one cookie now, or two cookies later’ experiment by Walter Michel is one of the most famous experiments in the history of psychology. A group of four-year old children were exposed to this cruel dilemma: A choice between one cookie now or two cookies in 15 minutes.
About half the children managed to wait the agonizing 15 minutes for the two-cookie payoff. The study showed that the children with more self control had substantially higher scores of intelligence.
Investors today face a trading-related “one cookie now or two cookies later” conundrum. The risk/reward ratio at current levels is unattractive to both buyers and (short) sellers. Here’s why.