Valuation on financial markets: Calculations of emotions and emotional calculations

How do actors on financial markets transform the plethora of informational signals into concrete valuations of traded assets? How do they make decisions in an environment characterized by fundamental uncertainty? Although there is a rich tradition in economic sociology suggesting that emotions and other subjective factors play a decisive role in this regard, empirical studies of their relevance for economic action have remained rare. The present study seeks to fill this void. It investigates the emotional underpinnings of the practices of financial valuation in the German financial sector. Drawing on in-depth interviews with, and ethnographic observations of day traders and fund managers, the study shows that emotions are essential ingredients of their collective calculative practices. Results of the present study yield three empirically grounded key concepts that advance understanding of emotions in financial valuation: First, subjectively experienced market feelings enable traders and managers to imagine imminent market futures. Second, market sentiments reflect traders’ attributions of specific emotional qualities to financial markets and facilitate their understanding of market behaviour. Third, floor emotions are collective emotions in which traders become involved in organizations and on trading floors that help mitigate situational uncertainty.