Lemmings & Herd Mentality equate to stock market losses

The leaders represent less than 2% of the population yet take in more than 90% of the profits. Getting to this stage is not easy as it involves changing one’s ingrained modes of behaviour. Sol Palha

Lemmings & Herd Mentality

Make sure you have read the first two parts before reading this post. If you jump straight to this post you will miss out on some important lessons.

Overcome Herd mentality & Win Investing Game.

Mob Mentality: Understand, Overcome & Win StockMarket Game

Lemmings & Herd Mentality Equates To Financial Loss

We have stated so many times in the past that the basic principles of mass psychology are extremely simple, that its simplicity is what makes it difficult. The lemmings (masses)are taught that everything good must be hard to learn or acquire; nothing could be further from the truth, and the only thing true here is the stupidity behind those that make this statement.  What so-called experts, master psychologists, economists and the general masses are doing is that they are confusing the concept of hard work with being patient.

Patience and hard work have nothing in common; in fact, many impatient individuals are very hard-working, and they are forever getting clobbered on the head when it comes to investing. Consequently, many patient individuals hardly work hard at all, yet they make some of the best investment choices out there.  The way to win is not to stop being a lemming and instead formulate your own opinion, instead of simply following the herd and hoping for the best.

The only two things one needs to succeed in life are patience and discipline

If one master’s these two principles, then one draws a lot closer to grasping the concept of mass psychology.  Hence, if one understands what  Herd Mentality is and what drives the Mob, then one can significantly improve one’s own odds of winning.    Thus, never make the mistake of confusing hard work with true success for they are not connected at all.  We use the word true success because one can indeed make a lot of money from working oneself to death and neglecting one’s health or the development of one’s mental facilities but then is it true wealth or true success if you have several million in the bank, and your health is shot to pieces.  We would call that true poverty for without your health all the money in the world is worth nothing.  Optimum health is priceless.

Without Good Health, Wealth means Nothing

So to summarise one has to be willing to take a deep look at oneself, one has to be willing to strip all the layers of deceit or pretence one has put up for the rest of the world. Only then can one get an insight into what one wants. It does not take a lot of work, all you have to do is sit down and honestly ask yourself what is it that makes you happy? To help your mind fall into the right state all, you have to do is go back to your childhood or to a time when you had almost nothing to worry about and then look at what it was that made you happy then. 9 out of 10 times you will find that those very same things that made you happy then are what will bring joy and light to your life now.

You need to free your mind from the constraints society imposes on you

When you do this, also you will be able to instantaneously see all the nonsense and the fake lives everyone around you is living. When you see this you will be able to spot a good investment from a bad one, you will be able to understand that the principles of patience and discipline have nothing in common with hard work, in fact, they are very easy and simple to master. But to do all this, you need to strip yourself to the very bare bones and then and only then will you be in a position to truly take the first powerful step up on the staircase of understanding mass psychology.

Mass psychology is what separates great investors from mediocre ones

As more and more investors enter into the financial markets and start to tinker around with fundamental analysis and technical analysis; the only truly powerful tool that will separate you from the packs will be mass psychology. As we enter the 21st century this old and almost forgotten science is going to be one of the most powerful tools out there; it worked marvellously centuries ago, and it will continue to work marvellously centuries after we are gone.  That’s not to say that TA will have no place in investing; it will always have a place and those that master it properly will always be able to use it lock in handsome rewards but imagine how much more rewarding the experience of investing will be both on a personal and a financial level if you master the simple principles of mass psychology.

Michael Montaigne, A man born before his time

We are going to provide the third and final excerpt from this truly inspiring book that was writing by a gentleman that was born before his time in the 1500’s.

In the study of history we must thumb without distinction every sort of author, old or new, French or foreign, in order to get at their great variety of matter, But Caesar, in my opinion, deserves particular study, not only for his knowledge and manner but for himself. Aside from the false colours with which he seeks to paint over his bad cause and the filth of his pestilent ambition, the only fault I can find with him is that he spoke too little of Caesar.  

The Second excerpt

In reading history, I am accustomed to considering who and what the author may be. If he is a professional writer, I expect to learn from him mostly style and language. If he is a lawyer we should note what he offers on civil government, legal controversies and the life; if an ambassador, what he says on the sources of information and the conduct of negotiations. We should always bring the cobbler to his last.  

I like historians who are either very simply or very capable. The simple ones make it their business to merely collect what comes to their hand and record it faithfully, without discrimination or contributing anything of their own mind; they leave us to our own judgement in getting at the truth. Such for example is honest Froissart, who is frank enough, when he is caught in error, to correct it on the spot and who gives us the varied accounts made to him of the same event and even the rumour current in his time. His is the naked raw material of history, which everyone may profit by as far as he is able. 

Excerpt Number three

The really capable and excellent historians possess the judgement to sift the reports that come to them and choose those most likely to be true. From the mind and character of a prince, they deduce this intention and put the proper words in his mouth. But certainly this privilege belongs to a very few  

As for the others, who fall between the two (and they are the majority), they spoil everything. They want to chew our meat for us. They assume the right to judge history and accordingly distort it to their own bias. They undertake to select what is worthy to be known and often hide from us the very word and gesture which would teach us the most.  They omit as incredible as anything they can’t understand and many things, perhaps because they don’t know how to express them in good Latin or French. 

For the most part, but especially today, your historian or biographer is elected for work because he knows how to handle language as if we were to learn grammar from them. They are hired to weave the reports they pick up on the streets into a pleasant jingle of words and sell us so much babble.  But good histories are those written by men who either commanded or participated in the events they describe or at least have had similar experiences. Even so, the research for truth is delicate. Asinius Pollio found mistakes in the histories of Caesar himself, either because he could not have his eyes everywhere or credited the false account of his lieutenants.

The Fourth Excerpt

As a matter of fact, the knowledge we have of our own affairs is obscure enough. To aid my weak memory, I have adopted a custom of late to note at the end of very book I read (and do not intend to read again) the date when I finished it and what in general I thought of it. And yet it had befallen my time and again to open a book as new and untasted which I had carefully read a few years before and scribbled up with my notes.

As we stated, we would finally provide the name of the very wise and learned gentleman we have been quoting for the last three weeks.  His Name is Michel de Montaigne and the title of his book his Michel de Montaigne- “The Complete Essays of Montaigne” and the best part is that you can read it for free.

The video below provides an overview of the subject for those of you who prefer to listen and watch as opposed to reading the above text.

Other Articles of Interest:

Currency wars & Negative rates will destroy fixed income individuals (Feb 25)

Financial Markets Gripped by Panic & masses stampeding  (Feb 23)

Interest rate wars-Fed stuck between a hard place and a grenade  (Feb 23)

Mob Psychology: Market Crash of 2016 buying opportunity (Feb 21)

People’s QE: Central bankers forcing public to speculate (Feb 18)

Currency wars explode: Negative interest rate wars start (Feb 15)

Medvedev states Merkel’s immigrant policy quite simply stupid (Feb 12)