The S&P is in a ‘One Cookie Now or Two Cookies Later’ Zone

by Simon Maierhofer
Market Watch

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.

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