Mob Psychology- How to win the Stock Market investment Game
Please make sure that you have read part 1 of this series. The main theme here is to show you how mob psychology also know as mass psychology can be used to keep one on the right side of the markets. Quotes from the author Michel Montaigne will be used to drive in some of the points of mob psychology.
The Founding principles of Mob Psychology are very simple
When the masses panic, the astute investor will start to nibble at stocks, when the masses are throwing the baby out with the bathwater, its time to back the truck up. When it comes to market tops, the opposite applies. One should sell when the masses are dancing an celebrating that the good times will last forever; in other words, they are in a state of ecstasy.
Lastly, don’t confuse hard work with the concepts of smart investing; hard work usually pays very poorly when it comes to the stock markets. Experts, master psychologists, economists and the general masses confuse the concept of hard work with patience. Impatient individuals tend to be hard workers, but are forever getting clobbered on the head when it comes to investing. On the other hand, many patient people hardly work hard at all, yet they make some of the best investment choices out there.
Patience and Discipline are essential to one’s success
The only two things one needs to succeed in life are patience and discipline, and if one can master these two principles, then one draws a lot closer to grasping the concept of mass psychology or put in another way if one master’s mass psychology one learns these two critical disciplines. Thus never make the mistake of confusing hard work with true success for they are not connected at all. 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. This begs the question if your health is shot and you have millions, can this be construed as a success, we think not, for without your health you are nothing.
Spotting a Good Investment is not that Hard
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 honestly take the first powerful step up on the staircase of understanding mob psychology. 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 mob psychology.
Montaigne on Mob 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 home, and those that master it properly will still be able to use to 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 mob psychology.
In the study of history we must thumb without distinction every sort of author, old or new, French or foreign, to get at their great variety of matter, But Caesar, in my opinion, deserves particular study, not only for his knowledge and manner but 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.
In reading history, I am accustomed to consider 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.
Random thoughts on Investing
The trend is your friend anything that falls outside or in between that is your enemy. Never fight the trend for the outcome is always the same; the outcome in case you have not figured it out yet is that you will end up on the losing end. We continue to monitor the weekly charts closely as a bullish MACD crossover could lead to an explosive upward move. However, if the crossover fails to complete the markets will finally let out a nice dose of steam.
We see no reason to worry; investors should continue with their daily lives and focus on the things that make you smile or leave you in a peaceful state. Remember, today’s news is nothing but weaponised propaganda.
Market Update Sept 30, 2019
Politics and the Markets
We have been asked time and time again about what candidate or party we would support. Let’s start by stating we never allow our personal views to infect or prejudice our outlook that is a recipe for disaster. The players on both courts can be described as lobotomised individuals with drug-induced dreams of creating a brighter future but without a meaningful plan to bring these dreams to fruition.
Almost every politician is trying to look good instead of doing what is good for the nation; in the process, these politicians look more and more like snakes and hence, the low approval rating. If we were to ever endorse a politician it would have to be someone like Ron Paul, someone who favours the libertarian outlook, looks to control the debt, reduces our interference in foreign nations, tries to implement some hard money policies and most of all tries to improve the country instead of trying to help the corporate world fatten their wallets. However, the odds are stacked against such a person, and so it’s wishful thinking even to entertain the thought of someone like this taking the reigns of power.
So we are left with choices that fall under the category of bad or incredibly bad; which brings us to the saying it’s better to deal with the devil you know than the one you will be forced to discover. Taking the observers perspective, and following the rules of trend analysis and mass psychology, the markets seem to favour a Trump Win. Pay attention to what we have just said as this is not an endorsement, this view is based on mass psychology and trend analysis.
Now if Trump does not win, what does that mean? Absolutely nothing (as far as we are concerned) in the grand scheme of things and we would not lose one night of sleep over it. We would move onto Plan B; life goes on with or without you. However, there could be a civil war like event if he losses and you already know why, so there is no need for us to discuss this topic. For those of you that don’t; well, here is a hint; this country is deeply divided into red and blue sections, and the red section is quite large in terms of size. The blue section is large in terms of population density. When two hot heads clash, all hell breaks loose, and the animosity between these two groups grows by the day.