A study by two finance professors at the University of California – San Diego found that hospitalizations went up when the stock market went down significantly. Anxiety attacks are particularly common and severe.
The study comes just as retail investors are slowly coming back into the stock market, after the credit crisis scared them off.
The study estimates that the cost to our health care system of market-related hospitalization is $650 million a year. We’ve become familiar now with the mind-body effect. Add to that the market-mind-body effect. We can only control two out of those three.
You could draw a lot of lessons from this, but here’s one. Setting stop losses and managing risk—not to mention attending to your health and managing stress— is not only good for capital preservation and profitable decisionmaking. It just might save your life.