Emotion Vs. Logic

Today, in the New York Times, I read a very interesting article about the fear that is being created about the entire economic crisis. In reading this article, I recognized my own thoughts, which I had expressed in class last week. The article which appeared below the fold on the front page was titled, "Forget Logic; Fear Appears to Have Edge". The article discusses how many people are not thinking about the consequences of their reactions to this crisis. They are often "selling first, and asking questions later".
I liked how the author alluded to people pulling "an iron sheet over their heads because they think the sky is falling". I agree. I feel too many people are panicking over the issue, not that panic is abnormal to this situation. People have every right to panic, but what people must also realize is that by selling all of their stocks, they are only helping to create a crash. People want to blame the economy on legislation, which yes in some ways, it is very much to blame. However, we can not simply forget the fact that the big wigs from AIG celebrated bankruptcy by spending over $200,000 dollars on a spa trip.
The true problem is that logic is the answer and instead people are reacting based on the emotion of fear. For too long we let greedy people take our money and we did not ask questions about our investments because we trusted that "they" would take care of "us". Unfortunately that was not and is not the case.
History shows that if the investors can regain a sense of stability in the stock market and and "be persuaded that the economy and housing market will be recovering soon", that the market usually will have "recouped about a third" of their losses within "the first 40 days after the market hits bottom."
Therefore, while the stocks are cheap, now is the time to invest small amounts back into the market with hopes of getting it back onto its feet.