Mass Formation Psychology: Understanding Collective Hypnosis

Mass Formation Psychology: Understanding Collective Hypnosis


Mass formation psychology, also known as the “mass formation hypothesis,” is a phenomenon that has gained significant attention recently due to its potential role in explaining certain societal events. Many people have compared it to mass hysteria and mass delusion, but it is a distinct concept with its own unique characteristics.

In this article, we will explore what mass formation psychology is, how it differs from other similar concepts, and its potential implications for society. We shall investigate the constituents that can add to the emergence of mass formation psychology, and how it can be thwarted.


What is Mass Formation Psychology?

Mass formation psychology is a theory that suggests that large groups of people can become collectively delusional or hypnotized. This can occur when a society is exposed to a constant and repetitive message, causing individuals to become isolated from other viewpoints and believe in a particular narrative.

Unlike mass hysteria, which involves physical symptoms, and mass delusion, which is characterized by a shared false belief, mass formation psychology involves a shared hypnotic state that affects an entire population. This hypnotic state can result in the acceptance of a particular narrative, regardless of whether it is supported by facts or not.


How is Mass Formation Psychology Different from Other Similar Concepts?

Mass formation psychology is distinct from other similar concepts like mass hysteria and mass delusion. Mass hysteria involves a group of people experiencing physical symptoms in response to a perceived threat, while mass delusion involves a shared false belief.

In contrast, mass formation psychology involves a shared hypnotic state that is induced by a repetitive narrative. This narrative can be based on truth or falsehoods and is designed to control the thoughts and actions of the group.


Factors Contributing to the Development of Mass Formation Psychology:

Numerous factors may play a role in the emergence of mass formation psychology. One of the most critical factors is exposure to a repetitive message. This message can be disseminated through various mediums, including social media, mainstream media, and political speeches.

Another facet that can contribute to the development of mass formation psychology is the presence of a magnetic leader or group of leaders. These individuals can use their influence to manipulate the narrative and induce a hypnotic state in their followers.


Preventing Mass Formation Psychology:

Preventing mass formation psychology requires a multifaceted approach that includes media literacy education, critical thinking skills, and political transparency. It is essential to teach individuals how to recognize and analyze different sources of information and think critically about the messages they receive.

Transparency in the political process is also critical to preventing mass formation psychology. This includes holding leaders accountable for their actions and ensuring that the media has access to unbiased and accurate information.



Mass formation psychology is a novel notion that has garnered the substantial interest of late owing to its plausible role in elucidating social phenomena. Unlike other similar concepts like mass hysteria and mass delusion, mass formation psychology involves a shared hypnotic state induced by a repetitive narrative.

To prevent the development of mass formation psychology, it is essential to promote media literacy, critical thinking skills, and political transparency. By doing so, we can help individuals think for themselves and avoid being caught up in a shared hypnotic state induced by a repetitive narrative.



What is mass formation psychosis?

It is a theory that suggests large groups of people can become collectively delusional or hypnotized, resulting in the acceptance of a particular narrative, regardless of whether it is supported by facts or not.

How is mass formation psychosis different from mass hysteria and mass delusion?

Mass hysteria involves physical symptoms in response to a perceived threat, while mass delusion involves a shared false belief. In contrast, mass formation psychosis involves a shared hypnotic state induced by a repetitive narrative.

What factors contribute to the development of mass formation psychosis?

Exposure to a repetitive message and the presence of a charismatic leader or group of leaders can contribute to the development of mass formation psychosis.


How can mass formation psychosis be prevented?

Preventing mass formation psychosis requires a multifaceted approach that includes media literacy education, critical thinking skills, and political transparency. It is essential to teach individuals how to recognize and analyze different sources of information and think critically about the messages they receive. Transparency in the political process is also critical to preventing mass formation psychosis.


What are the potential implications of mass formation psychosis for society?

Mass formation psychosis has the potential to influence the thoughts and actions of an entire population, leading to the widespread acceptance of a particular narrative regardless of its accuracy. This can have significant implications for politics, public health, and social cohesion.




Stock Market Basics

Stock Market Basics

Unlocking the Secrets & Basics of Stock Market Trading

The stock market is always changing, and it can be challenging to keep up with the latest trends and market shifts. The COVID-19 pandemic has had a significant impact on the stock market, and it is more important than ever to understand the basics of stock market trading.

As we discussed earlier, the new market era is upon us, and traditional indicators and analysis methods no longer hold the same weight they once did. Mass psychology and contrarian investing are now essential for anyone looking to succeed in the market.

Jerome Powell, the Chairman of the Federal Reserve, has been criticised for his handling of the COVID-19 pandemic and its impact on the stock market. He pushed a significant amount of money into the system, leading to a boom phase and inflation. Powell even stated that a little inflation was a good thing. However, now that he has created the monster of inflation, he is trying to destroy it, which could push us into a recession and lead to more companies firing people.

To succeed in the stock market, one must have a deep understanding of mass psychology and how to use contrarian investing to their advantage. It is no longer enough to follow the crowd or rely on traditional analysis methods. Instead, one must be a modified contrarian or market technician and pay attention to market sentiment and extreme swings.

When the masses are jumping in after sitting out for a long time, it is fair to assume they have collected a lot of money while sitting on the side-lines. They are also likely upset that they missed out on so much of the rally and want to make up for lost time. However, the new contrarian would wait for a pullback before loading and riding the wave higher. The sentiment must reach the boiling point before the market puts in a long-term top.

There are a few basic principles that every investor should understand when it comes to the stock market. First, it is essential to have a long-term investment strategy that includes diversification across different sectors and asset classes. Second, investors should pay attention to market trends and understand the impact of global events on the market.

Third, investors should understand the importance of risk management and have a plan in place for managing losses. Finally, investors should be patient and disciplined, avoiding emotional decisions based on fear or greed.

Understanding the basics of stock market trading is essential for anyone looking to succeed in the market. Mass psychology and contrarian investing are now more critical than ever, and investors must be able to adapt to the new market era. By following the basic principles of long-term investment, market trend analysis, risk management, and discipline, investors can increase their chances of success and achieve their financial goals.

Basics of stock market Trading: Your Guide

Basics of stock market

Basics of stock market: Identifying extremes

Headline: A new era in stock market trading is upon us, and it requires a modified contrarian approach to navigate. The key lies in identifying extremes and exercising caution during market downturns. However, the Federal Reserve’s recent actions have highlighted the incompetence of its chairman, Jerome Powell, making it clear that the political system needs a drastic overhaul.

Market technicians, contrarians, the average Joe, and value investors alike will find themselves confounded by the new market system. In this era, anything goes, and volume and indicators will no longer provide an accurate outlook. Both fundamental and technical analysis methods will no longer be as effective, or perhaps even ineffective.

To navigate this new era, one must become a modified contrarian or market technician. Instead of relying on the masses jumping in as a signal to jump out, one must analyze the speed at which they are jumping in, the number of individuals jumping in compared to the volume that was dormant just a few months prior, and their staying power, among other factors.


Exercise caution during market downturns: a calculated approach

In light of the current market trends and the psychology of market participants, it is becoming increasingly apparent that the markets may soon test the lows witnessed back in 2022, and at least one index could trade to new lows. As tempting as it may be to jump into the market during a downturn, the current situation requires a more calculated approach.

However, the Federal Reserve’s chairman, Jerome Powell, has highlighted the incompetence of the political system, particularly during his psychotic helicopter money phase during the COVID crisis. To make matters worse, Powell even had the audacity to declare that a bit of inflation was good, and now he wants to battle the monster he created.



The Basics of Stock Market: Powell’s Incompetence

Verily, Powell’s actions are a textbook example of why one should never let someone with no experience run the Fed. His complete lack of understanding of basic economic principles is astounding. It seems he has no idea how inflation works or how it impacts the economy, and his erratic behaviour is making things worse for everyone. The fact that Powell is still in his position, despite his incompetence, is a damning indictment of the entire political system. He has no idea what he’s doing, yet he’s still in charge of the most important financial institution in the world. It’s time for him to step down and make way for someone who actually knows what they’re doing.

However, let us not forget that the stock market is a fickle mistress, and one must tread carefully when making bold statements. While Powell’s actions may seem misguided, it is important to remember that the stock market is not a simple beast. It is a complex system that is influenced by a multitude of factors, and one cannot simply blame Powell for all its woes.

That being said, it is clear that Powell’s actions have had a negative impact on the economy. By pushing so much money into the system after the COVID crash and then trying to destroy inflation after creating it, he has caused companies to fire people and could potentially lead to a recession. It’s time for him to step down and make way for someone who actually knows what they’re doing.

In conclusion, while Powell’s incompetence is a cause for concern, we must also remember that the stock market is a complex system that cannot be easily controlled. However, it is clear that Powell’s actions have had a negative impact on the economy, and it’s time for him to step down and make way for someone who actually knows what they’re doing.



Brainwashing vs Indoctrination: The Mass Psychology perspective


Introduction on Brainwashing

The manipulation of an individual’s beliefs and perceptions has been a topic of interest for centuries, and has been referred to as both brainwashing and indoctrination. While the terms are often used interchangeably, they hold distinct meanings that are crucial to understand in the context of mass psychology. Brainwashing is defined as a systematic process of imposing a new set of beliefs and values on an individual through repeated persuasion, whereas indoctrination refers to a less intensive form of socialization that focuses on the transmission of cultural or ideological norms.

Mass Psychology and the Shaping of Beliefs and Perceptions

In exploring the difference between brainwashing and indoctrination, it is important to examine the role that mass psychology plays in shaping our beliefs and perceptions. The concept of mass psychology refers to the way in which large groups of people can be influenced and manipulated through various psychological tactics. From propaganda to media manipulation, the power of mass psychology has been demonstrated throughout history, and its impact on shaping our beliefs and perceptions cannot be overstated.

Michel de Montaigne’s Philosophy on Beliefs and Perceptions

Michel de Montaigne, a French philosopher of the Renaissance period, was a keen observer of human nature and provided insights into the nature of beliefs and perceptions. He believed that our beliefs and perceptions are shaped by a combination of individual experience, social and cultural conditioning, and the influence of others. He argued that the mind is constantly in flux, and that our beliefs and perceptions are never fixed or certain.

Brainwashing and Indoctrination: A Distinction in Intensity and Coercion

When it comes to the distinction between brainwashing and indoctrination, the key difference lies in the level of intensity and coercion involved. Brainwashing is a systematic and intensive process that involves the use of psychological tactics to impose a new set of beliefs and values on an individual, whereas indoctrination is a less intensive form of socialization that focuses on the transmission of cultural or ideological norms. The power of brainwashing lies in the repeated persuasion and reinforcement of the new beliefs and values, which can result in a complete transformation of the individual’s beliefs and values.

Concluding thoughts

The distinction between brainwashing and indoctrination is crucial to understanding the impact that mass psychology has on shaping our beliefs and perceptions. Both concepts are important to understand in the context of Michel de Montaigne’s philosophy, which emphasizes the role that individual experience, social and cultural conditioning, and the influence of others play in shaping our beliefs and perceptions. By recognizing and understanding these tactics, we can protect ourselves from.

Investing for Beginners: A Wealth Management Guide

Investing for Beginners: A Wealth Management Guide

Investing for Beginners: A Guide to Wealth Management for Financial Success

If you’re looking to build and preserve your wealth over time, then wealth management is a critical component of your financial planning. Managing your investments, insurance policies, real estate, and other assets is essential to achieving your long-term financial goals. In this comprehensive guide to wealth management, we’ll explore everything you need to know, including financial planning, retirement planning, investments, risk management, and the role of financial advisors.

Why Wealth Management is Important for Beginner Investors

Wealth management is essential for beginners looking to achieve financial success over the long term. Without a sound wealth management strategy, you risk losing your hard-earned wealth, whether through poor investment decisions, unforeseen events, or other factors outside your control. With effective wealth management, you can retire comfortably, pay for your children’s education, or leave a legacy for your loved ones.

Different Types of Investments for Wealth Management

Investing is a crucial part of wealth management, but there are many different types of investments to consider. Conservative investments, such as bonds and mutual funds, offer lower risk, while riskier investments like stocks and alternative investments offer higher returns. Finding the right balance between risk and return is crucial for achieving your financial goals.

How to Create a Financial Plan for Retirement

Retirement planning is an essential part of wealth management. A well-crafted retirement plan can help you achieve your financial goals and ensure a comfortable retirement. In this section, we’ll explore the steps involved in creating a financial plan for retirement, including setting retirement goals, estimating retirement expenses, determining retirement income sources, and more.

Tips for Managing Investment Risk

Investment risk is an inherent part of wealth management, but it can be managed effectively with the right strategies. In this section, we’ll explore some tips for managing investment risk, including diversification, asset allocation, and assessing your risk tolerance. By managing investment risk effectively, you can reduce the likelihood of losing your wealth and achieve your financial goals more effectively.

The Role of Financial Advisors in Wealth Management

Financial advisors play a crucial role in wealth management. They can help you create a comprehensive financial plan, choose the right investments, manage investment risk, and more. In this section, we’ll explore the role of financial advisors in wealth management and what you need to know to find the right advisor for your needs.

Investing for Retirement: A Guide to Wealth Management for the Future

Investing for retirement is a critical component of wealth management. In this section, we’ll explore the steps involved in investing for retirement, including setting retirement goals, choosing the right investments, managing investment risk, and more. By investing for retirement effectively, you can achieve your financial goals and ensure a comfortable retirement.

Understanding Investment Risk: Tips for Managing Risk in Wealth Management

Investment risk is a critical component of wealth management, but it can be managed effectively with the right strategies. In this section, we’ll explore some tips for managing investment risk, including diversification, asset allocation, and assessing your risk tolerance. By managing investment risk effectively, you can reduce the likelihood of losing your wealth and achieve your financial goals more effectively.

How to Manage Your Wealth: Tips and Strategies for Successful Investing

Managing your wealth effectively is critical to achieving your financial goals. This section will explore some tips and strategies for successful investing, including setting financial goals, choosing the right investments, managing investment risk, and more. By managing your wealth effectively, you can achieve financial security and peace of mind.


What is saying the Nasdaq monthly chart?

Nasdaq monthly chart?

According to the Market Update from September 11, 2022, it was projected that if the markets followed a certain path, a test of the 9,900 to 10,500 range would potentially mark a bottom. This projection was based on the assumption that the markets would follow a pattern similar to that seen in 1973-74. If this were to occur, it would present a potentially significant opportunity for tactical investors to enter the market.

It is important to note that this projection was based on speculation and was not a guarantee of future market performance. It is not uncommon for markets to experience fluctuations and volatility, and it is important for investors to carefully research and evaluate any potential investment opportunities.

In November of 2022, the Nasdaq experienced two strong rallies, which may have set the stage for a test of the 12,300 to 12,600 range. If the Nasdaq is able to close at or above 12,600, it may pave the way for the market to reach or surpass its August highs. However, it is important to note that the future performance of the markets is always uncertain and that it is important for investors to carefully consider the risks and potential outcomes of any investment decisions.

In the August 27, 2022 Market Update, it was noted that the Dow had lost a relatively small amount of value, shedding less than 700 points since the previous update. At that time, the Dow was trading around 32,800, and it was suggested that risk-takers might consider opening long positions in the market.

In the August 2, 2022 Market Update, it was stated that the markets were entering a corrective phase and that the SPX had reached short-term targets. It was also noted that former support points had turned into resistance, which could potentially turn into zones of support again on a short-term basis. It was suggested that the market might experience a pullback to the range of 3960 to 4020, with a possibility of overshooting as low as 3870.

In the September 11, 2022 Market Update, it was reported that the markets had traded as low as 3,886, falling below the low end of the suggested range by roughly 70 points. However, it was also noted that the markets were likely to continue rallying as the selling pressure was easing, bearish readings were high, the masses were uncertain, and the dollar was close to reaching a short-term top.

In the same update, it was suggested that risk-takers should continue holding their positions until the Dow tests the range of 33,600 to 34,000 and the Nasdaq trades to 13,500. At that point, it was suggested that all higher-risk positions should be closed, though it was noted that investors could modify this trade to fit their own trading style.

Investment opportunities


Investment opportunities

RGLD is a gold stock that has proven to be a good investment opportunity even during market crashes. By simply buying and holding this stock, an investor could have seen significant gains. In fact, the profits from RGLD began to surge after 2011, which was when the Federal Reserve started to print more money. This shows that the recovery period between market booms and busts is now about 5 times faster than it was in 2009.

However, using a more advanced strategy such as analyzing long-term charts (monthly charts) can lead to even greater returns. By using these charts to determine when to buy and sell, an investor could potentially double their returns. For example, an investor could use monthly charts to enter and exit the market while the trend is still positive. Experienced traders could take this strategy a step further by using weekly charts to make more frequent trades within the overall trend determined by the monthly chart. This strategy involves selling when the stock is trading in the overbought range and repurchasing when it moves into the oversold range. It is important to note that this advanced strategy should only be attempted by traders with some knowledge of technical analysis.

Overall, the lesson here is that by remaining calm and not giving in to fear, an investor can achieve outstanding gains over the long term. History has shown that this is possible, even during times of market volatility. It is especially important to be aware of the narratives being created by top players in the market, as they may try to prematurely create the illusion that the bull market is dead forever. These players have significant financial power, and they may continue to manipulate the market in this way with increasing frequency. It is crucial for investors to prepare themselves psychologically for these tactics in order to avoid potential losses.

It is important to note that the information provided in the statement is purely speculative and not based on factual evidence. The statement suggests that some large players in the market intentionally create disasters or crashes in order to profit from the fear and panic of others. It is not clear how these players would be able to consistently create or predict market crashes, and it is not advisable to base investment decisions on speculation or conjecture.

It is never a good idea to blindly follow the strategies of others or to base investment decisions on speculation or conjecture. It is important to carefully research and evaluate any investment decisions and to consider the risks and potential outcomes. It is also important to diversify one’s investment portfolio and to seek professional financial advice before making any major investment decisions.

While it is true that the short-term outlook for the market may not always be favorable, it is important to consider the long-term potential for growth and to look for opportunities to invest in strong, reputable companies. It is possible that 2023 may present some challenges for investors, but it may also offer some fantastic opportunities for those who are astute and tactical in their approach. It is important to carefully consider the risks and potential outcomes of any investment and to make informed decisions based on thorough research and analysis.

Market Psychology: How the crowd always loses in the stock market?

market psychology and mass mindset

Stock Market Psychology for Dummies: If you have common sense then Mass Psychology is easy to grasp

If you understand how the mass mindset operates it provides you with an edge when it comes to investing in the stock market. The odds are stacked against the individual investor so that any trading advantage one can obtain, should be embraced.  The idea behind the psychology for dummies article was to create a visual representation of the mass mindset in investing known as  market psychology, and the chart below captures the thoughts that go through the mind of the average Joe.  The herd mentality or Pack mentality should never be embraced; one you are part of the pack you virtually guaranteed to lose.


The masses never seem to learn from history, and sadly are doomed to relive these events again and again.  It is reminiscent of the movie “Ground hog’s day”, where the main character is condemned to relive in each day again and again for eternity. However, fortunately, he manages to find the cure to his problem.  Sadly this option is not available to the masses as they do not even recognise the problem. Over 80% of the solution to any problem is identifying the problem.


Market Psychology for Dummies; Graphic representation of the Mass Mindset in Action 

  1. The stock is going nowhere; its pure junk, let me look at something else.
  2.  Lucky break, it’s going to crash definitely.
  3. What, it’s still going up! Earnings are not so good, people are getting carried away, it’s going to pull back and crash.
  4. Ahh, see I knew it was going to crash, thank God I did not buy. (Mistake the mass mindset misses the main point here. Yes, it pulled back but look where the pull back ended–miles away from its first breakout. A losers mind can only see the picture for what it is not, by replacing it with a picture from his or her imagination. Since they live in a losing sphere, they focus on the negative aspects but not on the positive aspects.
  5. What happened here; this stock was supposed to crash, how the hell did it get here? Perhaps I should have bought; I could have made a lot of money; this looks like a sure thing. (So only halfway through stage 5 will the mass mindset decide it’s safe to venture out. 
  6. Now, this person finally musters the courage to buy.) Wow, it went up, great, I’m making money.
  7.  This stock is going to go to the moon; let me tell all my friends about it; it looks like a sure thing.
  8.  What happened? It pulled back. Ahh, I am not going to fall for this like I fell for it last time (look at number 4). Time to buy more, buy on the dip, that’s it.
  9. I knew it, it’s going up, and I made more money, wish I had bought more. Next time I will invest more on the pull back. (Notice the loser’s mindset does not bother to take the time to see that the stock did not put in a new high. All that matters is that it went up.)
  10. It’s going down again, time to load up; I don’t want to lose this opportunity. Earnings are great, so it must be a good time to buy some more.
  11.  The first dose of bad news and the stock takes a big hit; okay, this is just temporary; it’s going to go back up. (Blind faith huge mistake, one of the main ingredients of a losing mindset). Let me buy more and average down.
  12. Maybe I should sell now as the outlook does not look that great, but maybe things will improve.  Let me just hold for a bit longer.  Yeah, things have to change. Look how fast this stock went up; additionally,  it has pulled back so much. The worst is over; it has to go up.
  13.  This stock is dead; I have to get out.  Secondly, it looks like it’s not going anywhere (this is when the stocks start to bottom. The secret programmed desire to lose syndrome has completed its mission. Trader is in a state of extreme distress and shell-shocked). I am never going to look at this or any stock like this again. Moreover, comparatively speaking  I knew it was garbage.  Why did I ever buy it in the first place?  The stock starts to put in slow base formations and the possible start of a new uptrend. Moreover,  the worst part is that this trader is no longer in the market.  Lastly, he let panic get the better of him and bailed out just when he should have been buying.

Stock Market Psychology for Dummies final thoughts

Take a close look at the above picture, for it clearly illustrates the mass mindset in action. The masses never learn, they will always be used as cannon fodder as that is the role they secretly wish for. Remember the saying “misery loves company, but stupidity simply adores it”  The masses always dump when they should be buying and buy when they should be selling.

Nothing in this world comes easy for if it did, it was not worth it in the first place. A little work and patience are all that are needed to overcome the fear necessary to break away from the masses.  In this world, it’s not what you know that can hurt you, it’s what you think you know but don’t that hurts you the most. We hope you find this psychology for dummies article useful.

Published courtesy of the Tactical Investor


The Art of Cutting Your Losses

One of the most enduring sayings on Wall Street is “Cut your losses short and let your winners run.” Sage advice, but many investors still appear to do the opposite, selling stocks after a small gain only to watch them head higher, or holding a stock with a small loss, only to see it lose even more.

No one will deliberately buy a stock that they believe will go down in price and be worth less than what they paid for it. However, buying stocks that drop in value is inherent to investing. The objective, therefore, is not to avoid losses but to minimize losses. Realizing a capital loss before it gets out of hand separates successful investors from the rest. In this article, we’ll help you stand out from the crowd and show you how to identify when you should make your move.
Holding Stocks With Large Losses
In spite of the logic for cutting losses short, many small investors are still left holding the proverbial bag. They inevitably end up with a number of stock positions with large unrealized capital losses. At best, it’s “dead” money; at worst, it drops further in value and never recovers. Typically, investors believe the reason they have so many large, unrealized losses is that they bought the stock at the wrong time. They may also believe that it was a matter of bad luck, but seldom do they believe it is because of their own behavioral biases. Read more


Why People Lose Money in the Market?

Many new investors have found that, soon after buying their first stock, its value dropped by half. It makes for a disappointing introduction to the world of investing, but it can also prove to be a valuable wake-up call, inspiring you to learn everything you can about investing in the markets. While investing in financial markets over the long-term is an excellent path to wealth, it’s not unusual to experience occasional losses as investment values go up and down

Here’s what you need to know about why people lose money in the market—and how you can bounce back from a loss in your portfolio

Not Understanding Market Cycles
People often lose money in the markets because they don’t understand economic and investment market cycles. Business and economic cycles expand and decline. The boom cycles are fostered by a growing economy, expanding employment, and various other economic factors. As inflation creeps up, prices rise, and GDP growth slows, so too does the stock market decline in value.

Investment markets also rise and fall due to global events. After 9/11 the stock market fell 7.1 percent, the biggest one-day loss in the exchange. By Friday, September 15, 2001, the New York Stock Exchange had dropped 14 percent while the Dow Jones and the S&P 500 fell 11.6 percent. Read more

How to invest in stocks?

How to invest in stocks?

How to invest in stocks: The playing field is not level

We covered this topic several years ago, but we used a chart of the now defunct company, CMGI.   Hence, decided to come out with this new update.  In this example, we will use the NASDAQ. The chart below is a graphic representation of the thought process that the average investors experience when trying to get into any investment. The same concept applies to any stock, index or any market.  Hence GOOG, AAPL, WMT, IBM, NTES, SOHU, MSFT, etc. are all bound by the same rules.

Most investors jump into the markets without taking the time to do any legwork. They assume by reading a few books, listening to the talking heads on CNBC and following a few so-called experts, they are ready to take on the stock market.  The market is a mighty beast that has a win ratio more than 90%. Only 10% of investors can consistently claim to make walk away with gains.

Get a grip of your emotions before you invest in the markets

The ordinary individual regardless of their background is almost always on the receiving end of the stick when it comes to investing. The reason for this predicament is predicated upon the fact that the typical person leaps before he thinks. In other words, the decision-making process is driven by their emotional state. Emotions and investing are like oil and water, no matter how hard you try they will never mix. Emotional traders are bankrupt traders. Throw emotions out of the window; kill them on sight.

The solution to winning in the markets

The solution to this dilemma is dangerously simple. In fact, it is so simple that its simplicity is what makes it so hard for the multitude to implement. As we stated emotions should be shot on sight; the acronym shoot and ask questions later is highly applicable in this instance. Emotions should never be allowed to have a seat at the discussion table. To be a successful investor one needs to do the opposite of their useless emotions are dictating.  There is simply no place for any extreme deviation from the norm when it comes to investing, and euphoria and panic are extreme deviations from the norm.

mass mindset nasdaq

How to invest in stocks: Observation

  1. This stock is going nowhere; it is hardly moving, and the fundamentals are weak. I need to find a high flyer one that can move and not this laggard.
  2.  Pure luck, the fools who jumped in, will regret it. This is a false breakout.  This stock is going drop to new lows. I am not going to waste my hard-earned money on this junk.
  3. Holy smokes, the stock is still going up. Earnings are terrible, long-term fundamentals are not great, and the technical outlook is far from perfect.  I think I will pass, as I am sure, it’s going to crash and burn. I am convinced is the secret code word for knowing nothing. Moreover, it is impossible to use technical indicators actually if you are looking through an emotional lens.
  4. Thank goodness I did not buy; I knew it was going to crash. Instead of focusing on the fact that the stock is letting out some steam and building momentum for the next leg up, the mass mindset sees’s only what it wants to see. Governed by useless emotions, it is unable to recognize the opportunity, as it has an almost unstoppable affinity for embracing the opposite.  In this instance, the market did pull back, but a close examination reveals that the pullback is just the market letting out some well-deserved steam. In fact, the market ends up putting in a higher low, which is a very bullish development.  The horde has an impeccable record at jumping into an investment when euphoria is the air, and out of them when blood is flowing through the streets.
  5. Wait a minute, what’s going on here? The market was supposed to crash. Maybe I made a mistake in not buying. Well, it’s not too late; the picture looks good, and analysts are upbeat about earnings, so I think it is still not too late to get in.  The masses need reassurances that all is well, but reassurances come only towards the end of the game. Finally, this chap musters the courage to jump in.  Wow, it went up, great; I’m making money.
  6. I was smart to wait until things improved before getting in; it looks like the markets are going to take off……….. Let me call all my friends and tell them to jump in before it’s too late. Remember when everyone is happy, it is usually time to hit the road.
  7. What is going on; why is the market dropping? It’s only a pullback; I am not going to fall for this game again (look at reason number 4). It’s time to average down and load up.
  8. There you go; I knew it was going to turn around. I should have put more into in the market. Next time, I will load up as this is the way to make money.  Now the secret desire to lose syndrome kicks in.  This guy is trapped in a euphoric mood and fails to recognise that the market did not trade to new highs. It put in a lower high, which should have construed as a warning signal.  The mass mindset as we stated before only detects what it wants to spot. For this guy, the only thing that matter is that he made some extra money.
  9. It’s going down again. Opportunity is knocking, and it’s time to load up. Earnings continue to improve; all the analysts on CNBC are bullish, and therefore, it must be a good time to put even more money into the markets. It’s time to back the truck and load up.  I need to call everyone and tell them not to miss this opportunity.  When you are sure about something, it’s better to sit out and wait. Overconfidence is a sure sign that you are missing something.
  10. The market is hit with a dose of bad news and pulls back very strongly.  Ah, this is just a temporary development.  The market will recoup and trend higher. I am going to buy more and average down. Gamblers always think of averaging down and hardly think of averaging upwards. All of a sudden, this chap has become an expert on the timing the markets. Blind faith is one of the main ingredients the masses seem to have an endless amount of. If you trade the markets on faith, there is only one thing waiting for you at the end of the cycle; loss and despair.
  11. Now panic and dread start to set in.  He questions himself. Did I do the right thing by buying more? Perhaps, I should have sold when I was in the black and booked those small gains I had.  Maybe it is time to bail out and cut my losses. Things don’t look so good now. You know what; let me hold for a bit longer, maybe things could suddenly change. The outlook has to change; things were great, and how could they change so suddenly.  The worst is over; it has to go up.
  12. Damn it; the market is dead. I am getting the hell out of the stock market. I should have never jumped in. I will never invest in the stock market. Ironically, around this time is when the markets start to give hints that a bottom is not too far in the marking. This individual is a bailing out when, in fact, he should be holding on. He is selling close to the bottom and allowing fear and anguish to direct his actions, just as he allowed joy to guide him into the markets.
  13. The market is going through a slow bottoming phase. Once this phase ends a new uptrend will begin.  This guy bailed out very close to the bottom. At this point, of the game, he should have considered holding onto the positions, as he had taken on an inordinate amount of pain hoping for a recovery. Instead, he opts for even more pain and suffering by selling very close to the bottom.

How to invest in stocks: Conclusion

It is imperative that you understand emotions can and will only push away from the right path. Their sole function is to confuse you and make the already complex job of investing even more complex. In other words, you are almost guaranteed to lose if emotions are the main driving force when it comes to investing in the markets.

Misery loves company, but stupidity simply demands it.” All emotions are based on perceptions. Perception is based on what one assumes to be real. What you deem to be real or illusory could change dramatically depending on whether you are calm or agitated.

The key ingredient to mastering mass psychology is to have control over your emotions.  Trying to identify the exact top or bottom is an exercise in futility best reserved for imbeciles with plenty of time on their hands with an inordinate appetite for pain.

The objective should be to distinguish subtle telltale signs that point out when a market is topping or bottoming.  Once this identified the practical move is to open a long or short position depending on what you have discerned, even though you might end up opening position significantly earlier than the masses; feel content when you are not in sync with the masses and apprehensive when you are.

The Best Investing Books

I have yet to read one technical analysis book that I was not inclined to throw into the trash can. Over the years, I looked at many books that covered this topic, and have found nothing of value out there. There are some books, with great pictures but other than that they contain nothing of value.  Almost every author seems to want to go out of his or her way to make the subject look complex. Secondly, half of the studies they mention are useless, and I am being conservative.   Here are some simple examples, Head and shoulders pattern, rising wedge, bull flag, cup and handle, and a host of other nonsense.

Let’s also not forget about the silly omens these books like to brag about, like the almighty useless death cross or the infamous Hindenburg omen, etc.. You would be much better served if you can master the art of drawing a simple trend line.

Mass Psychology

Before we put out a list of the best investing books to read, we think the topic of Mass psychology warrants a mention. Understanding the basics of Mass Psychology could go a long way in improving your investment journey.  Here is a brief excerpt on the topic:

Mass psychology is the study of group behaviour; the mass mindset draws comfort when it does not go against the views held by the majority.  For example, an investor feels comfortable buying biotech stocks because the crowd thinks it’s a good buy.  In other words, they are acting like lemmings; they are following the herd mindset.  In the markets teamwork does not pay; when the masses are euphoric, it is time to head for the exits and vice versa.

The astute investor purchases when the crowd panics and sells when the mob is jumping up with joy. The phrase to keep in mind is the following ” buy when there is blood in the streets and sell when the masses are ecstatic“.  This is the only way you can buy low and sell high with little to no stress. The masses refuse to use history as a guide and in failing to do so they are doomed to repeat it again.


Published courtesy of the Tactical Investor

Bitcoin is set to crash

Bitcoin Crash

Bitcoin Market Crashing: Is this the end of Bitcoin or a pause before the next Bull Run?

Whenever the masses fully embrace a market, trouble is usually close at hand, and that’s what occurred with bitcoin; the masses were completely enamoured with Bitcoin. The masses were euphoric and were expecting bitcoin to soar to the next galaxy. Wild targets of $100,000 were being issued that sounded more like the ravings of a lunatic than of an expert. In an article published on the 4th of December 2017 we made the following comments:

Bitcoin, on the other hand, is now in the feeding frenzy stage, so this market is ripe for a correction.  Tactical Investor

The problem with Bitcoin is that it’s not the only cryptocurrency; every Tom, Dick and Harry can issue a cryptocurrency, and to date, that is is what is occurring as we speak. There are so many cryptocurrencies out there that it in our opinion the better way to score a home run would be to issue your own cryptocurrency.

What caught our attention was that the masses were jumping up in joy and embracing bitcoin, but for over nine years they refused to embrace the equities bull market.  Mass psychology states that when the masses are euphoric (not to be confused with bullish); the outlook is going to take a turn for the worse. And more or less that’s what transpired with bitcoin.

Clear Psychological signals that all was not well

  • Long Island Ice tea; a company that has nothing to with the Bitcoin market decided to change its name to Long Block Chain Corp. Mind you the name change had not taken effect yet, but the effect on the stock price was immediate; it tacked on almost 200%.

The CEO of Long Island Ice tea had this to say about the upcoming name change:

“We view advances in blockchain technology as a once-in-a-generation opportunity, and have made the decision to pivot our business strategy in order to pursue opportunities in this evolving industry,”

What a load of rubbish as no one in the company has a clue as to how blockchain operates. It’s interesting to note that other than the intended name change, this company has no viable block chain product (as of the date of the above announcement). It just thinks it would be a good idea to get into this market. The company makes beverages for crying out loud. Before the name change, its stock was down roughly 40% for the year.  It is a tiny company with sales of just $1.6 million, and viola all it had to do was change its name, and its stock surged.

  • Riot Block Chain was known as Bioptyx, and its price soared after it changed its name. LongFin (LFIN), a financial company saw its price skyrocket after it announced it would be buying a blockchain microlender.  And most recently Kodak decided to take a similar route, and its stock price jumped.

At this rate, even companies that specialise in garbage might decide that it’s a good time to add the words blockchain to their names.  Hey, why not right? It’s like share buybacks on steroids; here you don’t even need to borrow money to buy back your shares, just change your name and voila, your stock soars in value.

  • The creator of Litecoin Charlie Lee sold his entire stake before bitcoin crashed; he claims it was due to conflict of interest. Strange he waited till now to sell it. Maybe it took a few hundred million for him to figure out that there was a conflict of interest issue?
  • People were taking out mortgages or cash advances on their credit cards to invest in Bitcoin. Taking money you don’t have to buy something you can’t afford in the hopes you score a home run; what could go wrong with such a brilliant plan?

The last Psychological Straw?

When two experts, James Altucher and John MacAfee stated that bitcoin was destined to soar to $1 million, it was almost a given that the outlook would change for the worse. We sent out the following warning to our subscribers:

Bitcoin is now in a full-blown mania stage; people are taking mortgages to speculate on bitcoin. Insane price targets of $1 million are being tossed into the air, and the masses are lapping it That is how the market works, it gives and gives but then it strikes and takes everything back ten times faster. Market Update Dec 17, 2017


Bitcoin futures; the perfect vehicle to manipulate Bitcoin

Bitcoin futures provides a great venue for the big sharks to swallow up the silly sardines hoping to strike it rich.  The big players can now manipulate the bitcoin market via the futures market. They can use Fiat money (worthless paper) to push it up or down, much the same way they did and are still doing with the precious metals markets. Which illustrates the lie behind the “Bitcoin is different nonsense”;   Bitcoin is nothing but digital fiat; in some ways, its worse as anyone can issue their own cryptocurrency.

 Bitcoin Crash

Courtesy of

If you look at the above chart, it puts into perspective how fast the situation went from excellent to unpleasant/painful. While the crowd is anxious, they are still not in panic mode.  The bloodletting will continue until the trend of lower highs that started after Dec 14, 2017, comes to an end.  On the conservative side, we think Bitcoin could drop down to the 8,800-9,200 ranges, but this market is far from your typical market, and there is a good chance that Bitcoin could drop down to the $5000-$5600 ranges before the dust settles.   The masses are notorious for selling at or close to the bottom, so while $5000 might appear implausible now, just remember that panic has a way of distorting reality. When a person panics, they forget what they are doing, their objective is to get out of the game as fast as possible regardless of the cost.

Bitcoin will trend upwards again, but the trending upwards does not mean it has to surge to new highs.  A bottom will be close at hand when experts stop issuing lofty targets and turn on this market.  Compared to the wild bubble like action the bitcoin/blockchain sector has experienced, the equities markets appear almost timid. One could argue that if these markets follow a similar path, then the Dow and SPX could trade a lot higher before experiencing a strong correction. And that lofty targets of Dow 30K might not be that lofty after all.  We will discuss this in a follow-up article, which we hope to publish with the next 1-2 day.

For those who want to play the bitcoin market,  a somewhat safer alternative would be via Bitcoin Investment Trust (GBTC). Its quite liquid and you can jump in and out with the click of a mouse.   Consider waiting until the sentiment turns decidedly negative or bitcoin is trading at least in the $8000 ranges before deploying some of your funds and don’t bet the house on this market.

On a final note, the outlook for Gold right now is far brighter than that for Bitcoin.