One of the key factors contributing to the crowd’s losses in the stock market is the influence of emotions. A growing body of research in behavioural finance has shown that emotions, such as fear and greed, can have a significant impact on investment decisions. For example, when the market drops, fear and panic can lead investors to sell their holdings and lock in their losses. Conversely, when the market rises, greed can drive investors to pour money into the market, often buying at the top and missing out on future gains. This emotional cycle can result in poor investment decisions and has been shown to be one of the key reasons why the crowd often loses in the stock market.
In addition to emotions, misinformation and groupthink also play a role in the crowd’s losses in the stock market. A recent study by the University of California, Los Angeles, found that many investors rely on financial advisors who may not have their best interests at heart. This can lead to poor investment decisions and missed opportunities for growth. Furthermore, the media often sensationalizes market events, which can lead to widespread confusion and misunderstandings among investors.
The herd mentality, a common phenomenon in the stock market, is also a factor that contributes to the crowd’s losses. This refers to the tendency of investors to follow the crowd, even if it is not in their best interest. Research has shown that the herd mentality often leads to buying high and selling low, as investors follow the crowd instead of their own instincts and analysis. This is particularly problematic when it comes to “hot” stocks or market sectors, which can quickly become overcrowded and lead to a market correction.
In contrast, contrarian investors take a different approach to the stock market. They are willing to go against the crowd and invest in stocks that are out of favour or undervalued. A recent study by the University of Chicago Booth School of Business found that contrarian investors outperformed the market by 2.5% per year over a 20-year period. This is due to their willingness to rely on a thorough analysis of a company’s financials and growth prospects, rather than being swayed by emotions or groupthink.
Furthermore, contrarian investors are patient and willing to hold onto their investments for the long term. A study by Vanguard found that a long-term investment approach can result in higher returns and lower volatility, compared to a short-term investment strategy. This long-term focus allows contrarian investors to ride out market corrections and reap the benefits of a well-diversified portfolio over time.
In conclusion, the crowd often loses in the stock market due to the influence of emotions, misinformation, and groupthink. These factors lead to poor investment decisions and missed opportunities for growth. In contrast, contrarian investors, who rely on informed analysis and a long-term focus, have been shown to outperform the market. The key to success in the stock market is to have a well-diversified portfolio, be patient, disciplined, and informed in your investment decisions, and avoid being swayed by emotions, misinformation, or groupthink.
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This Bull Market is universally disliked because it’s being artificially Propped
Throughout this bull-run, a plethora of reasons have been laid out to indicate why this bull should have ended years ago. Mind you most of those reasons are valid, but that is where the bucket stops. Being right does not equate to making money on Wall Street. In fact, the opposite usually applies. The Fed recreated all the rules by flooding the markets with money and creating and maintaining an environment that fosters speculation.
This is the most hated bull market in history is because logic states it should crash. In the 2008-2009 volume on the NYSE was in the 8-11 billion ranges and sometimes it surged to 12 billion. Before that, every year, the volume continued to rise, this indicates market participation. From early 2010 volume just vanished, it dropped to the 2-3 billion ranges and even lower on some days. Hence, all market technicians and students of the markets assumed that the markets would tank as markets cannot trend higher on low volume and that is where they erred.
No sellers around
The US government stepped in and started to support the market directly that is why volume dropped so dramatically. However as there were no sellers, the markets drifted upwards. Later on, they got the corporate world in on the scam. They set up the environment that propelled corporations to buy back their shares by borrowing money for next to nothing and then using this trick to inflate their EPS, without doing any work or even increasing the profitability of the company. Mass Psychology states that the masses are destined to lose; do not follow the crowd for they will always lead you
Mass Psychology states that the masses are destined to lose; do not follow the crowd for they will always lead you astray.In between a few minor corrections were allowed to transpire almost all of which took place on ever lower volume, to create the illusion that there was some semblance of free market forces at play.
Dark Pools helping this Bull Market Trend Higher
We also have something known as Dark Pools, this, in essence, allows big companies to purchase large blocks of shares without the trade showing up on the NYSE or any other major exchanges. In essence, it gives the government an avenue to manipulate the markets without actually leaving a footprint. As the US can print as much money as it wants, this is a perfect backdrop to do whatever it wants. By the way, don’t believe the hogwash that our debt is only 18.9 trillion. There is no real mechanism in place to check how much money the US creates. Nobody is allowed to audit the Feds books.
Fed’s objective is to devalue the US dollar
The Fed is hell bent on forcing everyone to speculate, and that is why we have moved into the next stage of the currency war games and the era of negative interest rates. Negative rates will eventually force the most conservative of players to take their money out of the banks and speculate. This process will be akin to another massive stimulus and will provide the bedrock for another huge rally.
Make a list of stocks that you would like to own and use strong pullbacks to add to or open new positions in. Some examples are OA, AMZN, BABA, GOOG, CALM, CHL, etc.
Video illustrates why this Hated Bull Market is destined to trend higher
Stock Market Fear and Greed are the primary driving force behind all markets
Stock Market Investing is all about not allowing one’s emotions to do the Talking; once your emotions start talking your money starts walking away from you. The financial crisis of 2008 scarred many individuals and scared away even more; add in the Great Recession, and one can see that the average Joe can come up with many reasons to avoid the stock market. However simple market sentiment analysis could have saved many a person from losing a significant portion of their wealth. To make matters worse, the unemployment rate remains stubbornly high, and wages in most instances are dropping instead of rising which means that many Americans have little to no disposable income left after expenses. Don’t for one second believe the twisted statistics issued by the BLS (Bureau of labour department); those statistics are on par with toilet paper.
Most individuals assume that they need a lot of money to invest in the markets
Stock Market Fear: Individuals making $30,000 or less per year are more likely to avoid the stock market, citing insufficient funds as one of the main reasons. There appears to be a misconception in thinking that one needs a lot of money to invest in the markets. Nothing could be further from the truth. One can start off with small amounts and slowly add to this base over the years.; the power of compounding is amazing. If you start young enough even putting away $50-$100 a month can add up to a sizable bundle by the time you retire.
The average person thinks that investing in the markets is very risky
This is just another misconception that has grown especially after the devastating crisis of 2008. If one is investing for the long haul and in quality stocks, then investing is one of the surest ways of making money and building a sustainable nest egg. However, one needs to understand what one is getting into and not plunge into the markets blindly as is the case with most individuals.
People assume that investing is hard to learn or master
We are referring to financial education and not higher education from institutes such as colleges or universities. We would even go as far as to suggest what these institutes teach regarding the stock market is useless. As with everything in life, if one wants to master a new skill, one needs to set some time aside for this endeavour. If you are going to talk the talk, then be ready to walk the walk. Don’t expect some expert to guide you to the promised land, for you will find that instead of finding paradise you are more likely to be welcomed into Hell.
https://www.youtube.com/watch?v=xkf44QK7Tng
Regarding the stock markets it would be wise to look at the history of the markets; study past stock market crashes; the events that lead to the crash and events that set the foundation for the next bull run. Then paper trade before deploying your hard earned cash?
If you are going to rely on a financial advisor; how are you going to know if he is not selling you sack of sawdust if you know next to nothing. In most cases people set themselves up to lose in the markets or to be taken advantage of; it takes two to tango. Surveys done by bank rate shows that Millennials were twice as likely as any other group to cite lack of financial knowledge as their main reason for avoiding the markets. If this trend persists, they are going to be ten times more likely to ask the government for handouts when they retire.
Most Investors Distrust the Financial Markets
Yes, one could say there is a valid reason to fear the markets as many Millennials have grown up in an era of financial disasters; two of the most painful ones were the dot.com bubble and the Financial Crisis of 2008, which later came to be known as the Great Recession. However, again, lack of financial knowledge and the wrong perspective is what provides the foundation for this fear. Fear is a useless emotion when it comes to the stock markets; the best time to buy is when blood is flowing freely; translation, so-called disasters always provide opportunities for the astute investor. Additionally, one could have easily sidestepped both disasters by paying attention to market sentiment; in both instances the masses were euphoric, and they thought the bull market could last forever. Nothing lasts forever and when the masses are ecstatic it is time to leave the party. Disaster can be viewed as an opportunity or as a tragedy; it all comes down to one’s perspective. Alter the angle of observance and the perspective changes.
The Concept of retirement planning is nonexistent for many
Bankrate states that only 25% of Americans check their investments and retirement accounts more than once a month. These same individuals can spend countless of hours on their phones texting each other or on Facebook or otherwise known as Face Crack. One does not need to look at one’s investments every day, however, spending time on finding out what’s trending or where the crowd is leaning could make the difference between banking your profits or trying to catch a falling dagger.
Ideally, individuals should have a rough idea of how much they would like to have by the time they retire and then come out with a feasible plan. Otherwise, they are bound to come up with some harebrained scheme that is fuelled by fear when they suddenly realise that the years have passed away, but the account is looking as miserable as it did on the day of its inception.
Fear and Greed drive the masses; they are Euphoric before a market crashes and panic close to market bottoms
Disaster is usually opportunity knocking in disguise, instead of running, stop and give it a massive a hug. The chart below clearly indicates that stock market crashes and other negative financial events are nothing but mouthwatering long-term buying opportunities.
The financial world often refers to black Monday (the crash of 1987) when they want to ratchet up the fear factor; on a long-term chart, it is just another blip that more aptly represents an opportunity rather than a disaster. In every instance before the market pulled back firmly, the sentiment was extremely bullish; in other words, the crowd was euphoric. If you used just followed the emotion you would have managed to avoid almost every disaster and this dates back to the tulip bubble. We are not talking about timing the exact top; those that try to time the exact top usually have plenty of time on their hand and an enormous appetite for pain.
For the masses, sharp pullbacks feel like a crash because they have the uncanny ability to buy exactly at the wrong time; they buy high and sell low. We will examine the concept of opportunity being masked as a disaster in a future article.
How Fear and Greed to your advantage
The word disaster represents an opportunity for the astute investor. It is only the uneducated investor that views a market pullback through a negative lens, and this is usually done because they have not taken the time to study the markets. One would be well served if one spent some time in examining the history of stock market crashes and what was taking place before the markets crashed. In every instance, one will find out that the crowd was bullish and every Tom, Dick and Harry was busy giving out financial advice. When the crowd is happy, you should leave the party.
Spending a little time on history and market psychology could prove to be priceless. If you take the time to do this, you will have a better understanding of the markets than most so-called financial experts. The phrase “knowledge is power” was not coined for no reason, but there is a difference between knowledge and rubbish. When it comes to the stock markets, most of the stuff that is marketed as valuable is nothing but garbage and in many cases what the experts make fun of is what you should be paying attention to.
For instance, market sentiment is far from bullish even though the stock market is trading close to its highs. Hence, all sharp pullbacks have to be viewed as buying opportunities. When the crowd embraces this bull market, it will be time to leave the party.
Jesus said, “ Recognize what is in your sight, and that which is hidden from you will become plain to you. For there is nothing hidden which will not become manifest.”
The Gospel of Thomas vs 5 ( from The Nag Hammadi Library )
Information overload and the Stock Market Game
Stock Market Game: Under the guise of being “well informed”, the Age of Communication races toward the time when information is instantaneously available via a modem and brain interface made of nonmaterial’s and implanted at birth. Hello, the ultimate cyber-geek. However, there is no proof that more information helps the majority to be any happier, compassionate, or give us a few more nanoseconds of leisure. Information overload is one of the reasons most Investors lose Money in the Stock Market; they don’t know how to separate the riff from the raff. At the end of the day, investing is nothing but a stock market game; understand the rules and win or vice versa.
Most of the information on the Internet is Tainted
If unable to evaluate information, or realise that all information is tainted with someone else’s values, its values become part of you, just like viral code being entwined in our own cell’s machinery – or computer code – or belief sets.
Our parents first mould These belief sets. It was then the role of religious institutions and schools to develop our “internal software”, but now we are in a time when most are weaned onto the boob tube. At school, we have teachers who were themselves nurtured on “the boob tube”. Take this principle one step further and apply it to the markets and you can see Most Smart Investors don’t lose money in the Stock Market. They don’t allow the values of these so-called experts to become part of them and then they start to think like these experts. Most of these experts are nothing but shills selling false information they would never use themselves.
Television destroys an individual’s ability to Imagine or think out of the box
With television, imagination is not needed for entertainment, and information of many types comes “plain wrapped” with no need to discriminate between reality and fiction, the useful or useless. Just 15 minutes of watching cartoons a day kill a child’s creativity.
There are many reasons that have been advanced as to why traders fail. My own experiences with educating traders are that:
thinking without discrimination
skimming information without understanding
impatience with the expectation of quick gratification
The above three factors are major contributors to poor results.
Just as burning the bra didn’t help women’s liberation, smashing the boob tube is not going to change the way you think.
We must abandon ourselves to uncertainty and not cling to anything because it appears to be the answer. It is when we are prepared to look at multiple possibilities that we have the option to identify and follow The Truth.
By abandoning incorrect beliefs and certainty, we can follow The Truth. Strange but True. Beliefs that are forged in the fires of doubt can survive the light of reality. All other beliefs remain untested. Will they survive? Will you survive?
Additional Insights to playing the Stock Market Game
Most investors are not aware of Fiat and the dangers it poses. If you understand that Fiat only exists because the masses have been conned into believing it’s real money, then you will understand that all financial disasters are planned and that there will always be a solution. Why? Money is created out of thin air; hence, central bankers can create as much money as they want to rescue the financial system from the disaster they created. Each disaster creates a new breed of poor and makes the rich even richer.
Understand the simple law of Paradoxes; it will help keep you on the right side of the markets
Understanding the law of Paradoxes could help you in many aspects of your life, especially in the financial arena. The stock market is full of snake oil salesman, all trying to sell you a different take but most of these experts don’t put a penny into what they are marketing. They make their money by selling you junk that they would never touch.
Grasp the simple concepts that fall under the field of Mass Psychology & win the investing Game
Mass psychology states that one should never abandon the carriage until it’s about to buckle under its own weight. If you apply this principle to the markets; it boils down to buying when the masses panic (or there is blood in the streets) and selling when the masses are jumping up in Joy. While you are at it, master the simple principles of being a contrarian investor.
Information overkills creates a breed of dumb investors
The video aptly covers this topic and highlights the dangers of information overkill
Central BanksStock Market: Central bankers utilise fiat money to rain misery and pain on the unknowing masses. They no longer take from Peter and give to Paul, they make sure that Peter and Paul try to rob each other and everyone else to survive. They control the game, and you are just a pawn in this game. The only day the outcome will change, is when the Fed is eliminated from the equation. Many Great presidents and leaders warned of this day of reckoning but as usual, nobody listened, and it’s time to pay the Piper now.
Brian Rich, of Forbes, seems to agree wholeheartedly; this paragraph succulently summarizes his views.
Stocks continue to surge; stock market volatility continues to sit at ten–year (pre–crisis) lows. The interest rate market is much higher than it was before the election but now quiet and stable. Gold, the fear–of–the–unknown trade, is relatively quiet. This all looks very much like a world that believes a real economic expansion is underway, and that a long–term sustainable global economic recovery has supplanted the shaky post-crisis (central bank–driven) recovery that was teetering back toward recession.
The Fed is on course to eliminate the middle Class in the United States and create a new generation of slaves. In fact, it has already destroyed a significant portion of this group.
According to article published on CNN, 6 in 10 American’s don’t even have $500 in savings
Nearly six in 10 Americans don’t have enough savings to cover a $500 or $1,000 unplanned expense, according to a new report from Bankrate.
Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude. A little more than 20% said they would put it on a credit card, the report said, while 20% would cut their spending and 11% would turn to friends and family for financial assistance.
“This is a persistent American problem of how you should handle your finances and spending,” said Jill Cornfield, retirement analyst for Bankrate. Full Story
Another survey finds that nearly 7 in 10 Americans have $1000 or less in their savings accounts. GoBanking surveyed 7,000 people and found that 34 percent of the respondents had $0 set aside.
The current stock market bull is based on hot money; had the fed not injected trillions of dollars into the system, there would be no stock market bull or the so-called economic recovery.
These Quotes illustrate the Fed’s Nefarious Agenda
“The few who understand the system will either be so interested from its profits or so dependent on its favours, that there will be no opposition from that class.” — Rothschild Brothers of London, 1863
“Give me control of a nation’s money, and I care not who makes its laws.”– Mayer Amschel Bauer Rothschild
Great leaders have gone out of their way to try and educate the masses, but the masses have no interest in learning from history so will be doomed to repeat the mistakes of their ancestors; the price for this stupidity rises with the passage of each day. Each generation pays a higher and higher price for their lack of foresight and preparedness. These shadowy players rely on the fact that the masses are ignorant regarding what real money is. They control the education system and so ensure that from day one you learn what they want you to learn. The only way to break out is to start educating yourself.
“Most Americans have no real understanding of the operation of the international moneylenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.” — Sen. Barry Goldwater
“Whoever controls the volume of money in any country is the absolute master of all industry and commerce.” — James A. Garfield, President of the United States
“To expose a 15 Trillion dollar ripoff of the American people by the stockholders of the 1000 largest corporations over the last 100 years will be a tall order of business.” — Buckminster Fuller
“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford
“We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it.” Congressman Louis T. McFadden in 1932
“Some people think the Federal Reserve Banks are the United States government’s institutions. They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers.” — Congressional Record 12595-12603 — Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
“As soon as Mr Roosevelt took office, the Federal Reserve began to buy government securities at the rate of ten million dollars a week for ten weeks, and created one hundred million dollars in new currency, which alleviated the critical famine of money and credit, and the factories started hiring people again.” — Eustace Mullins
Suggested Strategy
Manipulation is the order of the day, and one can see this in every aspect of one’s life. This trend will continue to gather steam, and it will only end when the masses revolt. The masses are notorious for responding very slowly, so we can assume that by the time they snap out of their comatose, the markets will be trading at unimaginable levels. Tactical Investor April 2016
Well, the markets have soared significantly higher as expected and corporate debt continues to rise. Corporations are plugging money into share buybacks as this is the easiest way to create the illusion that EPS is rising. It is a win-win game; corporate director’s reward is based on performance. As long as they can create the illusion that earnings are improving their paychecks continue to increase.
One other powerful tool that investors can employ is to pay close attention to mass sentiment. When the masses are nervous, the markets will continue to trend higher. That’s why this bull market is often referred to as one of the most hated bull markets of history. Despite all odds, it has trended higher, and we predicted this would happen as mass sentiment was and is still somewhat negative. Until the masses embrace this crazy bull market, the path of least resistance appears to be in the upward direction.
We expect corporate debt to trade at levels that will make today’s insane levels appear sane one day. As long as Fiat is in play; every major pullback/correction has to be viewed as a buying opportunity. The markets will continue to be manipulated probably until the end of time or until Fiat is eliminated from the equation Therefore until the trend changes, every substantial pullback should be viewed through a bullish lens.
