An Illustration of the Mass Mindset in Action
February 1, 2005
It's not the bulls and bears
you need to avoid -- it's the bum steers.
Chuck Hillis ~
1= Stock is going no where;
its pure junk, let me look at something else.
2= Lucky break, its going to definitely crash.
3= What, it's still going up, earnings are not
so good, people are definitely getting carried
away, its 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 break out. 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 its safe to venture out. Now this person
finally musters the courage to buy.) Wow it
actually went up, great, I'm making money.
6= This stock is going to go to the moon; let me
tell all my friends about it; it looks like a
7= 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, thatís it.
8= I knew it, its going up and I made more
money, wish I had bought more. Next time I will
invest more on the pull back. (Notice the
loserís mindset does not bother to take time to
notice that the stock did not put in a new high.
All that matters is that it went up.)
9= It's going down again, time to really load
up; I donít want to lose this opportunity.
Earnings are great so it must be a good time to
buy some more.
10= 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.
11= Maybe I should sell now; things donít look
good, but you know what, let me just hold for a
bit longer. Maybe things will change. Yeah,
things have to change; look how fast this stock
went up and it has pulled back so much. The
worst is over; it has to go up.
12= This stock is dead, I have to get out; 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 state of extreme distress and
shell-shocked). I am never going to look at this
stock again; I knew it was garbage, why did I
ever buy it in the first place?
13) Slow base formations and the possible start
of new up trend and the worst part is that this
trader is out.
Take a close look at the
above picture; the masses will react in the same
way when it comes to this commodities bull
market. They will dump when they should be
buying and then they will try to 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. So make sure youíre positioned well
to take advantage of the coming spectacular bull
market. So far we have just barely begun the
This is not to be confused
with the concept of buying and holding. Every
now and then it's prudent to take some profits
off the table and invest this money when there
(gold, silver, oil, etc) is a pull back. However
one should always maintain a core position as
long as the long-term trend is up. Thatís
exactly what we did; we took profits in
November-December 2003 on Ĺ our positions and
are waiting for an opportune moment to add to
them again. When we wrote an article suggesting
that individuals take some profits on their gold
and silver positions, we were attacked on the
basis that we were trying to promote a sell off.
We specifically stated that one should not sell
their core positions, but only take some money
off the table; but everyone seemed to miss the
last part of our statement. If you look closely
most of 2004 Gold stocks did not really do
anything and in most cases actually lost money.
However, this type of behaviour is quite normal.
First you have a massive move up, then sideways
to down, and then a final quick pull back to
flush out all the weak hands.
Now just when everyone
should be studying the charts to look for new
entry points, the weak hands will start to
unload their core positions and this will indeed
be a fatal mistake.
It is what we think we know already that often
prevents us from learning.
Claude Bernard 1813-1878, French