Negative Thinking: How It Influences The Masses

Negative Thinking

Negative Thinking and how it affects your investments

When the trend is positive (UP) train yourself to view strong pullbacks, corrections and other negative developments through a bullish lens. Anyone can panic in the face of trouble, but only the astute individual can stand still and direct their energy to spotting opportunities. Don’t do what the masses are trained to do, for, after all these years of panic, they have nothing to show for it. Market Update Sept 15, 2019

The human mindset thrives on misery; it’s hardwired towards negativity

And that is due to the brain’s “negativity bias”: Your brain is simply built with a greater sensitivity to unpleasant news. The bias is so automatic that it can be detected at the earliest stage of the brain’s information processing. Take, for example, the studies done by John Cacioppo, Ph.D., then at Ohio State University, now at the University of Chicago.

He showed people pictures known to arouse positive feelings (say, a Ferrari, or a pizza), those certain to stir up negative feelings (a mutilated face or dead cat) and those known to produce neutral feelings (a plate, a hairdryer). Meanwhile, he recorded electrical activity in the brain’s cerebral cortex that reflects the magnitude of information processing taking place. The brain, Cacioppo demonstrated, reacts more strongly to stimuli it deems negative. There is a greater surge in electrical activity. Thus, our attitudes are more heavily influenced by downbeat news than good news.

Media Purposely pushes The Negative Thinking Concept

The media outlets know this very well, and that is why 3X to 5X more coverage is given to any story that has a negative connotation.  This also proves why the masses always lose when it comes to the market; they are too busy focussing on rubbish and miss the opportunity that’s right in front of them.

For example, you might be having a great day at work when a co-worker makes an offhand comment that you find irritating. You then find yourself stewing over his words for the rest of the workday. When you get home from work, and someone asks you how your day was, you reply that it was terrible—even though it was overall quite good despite that one negative incident.

This bias toward the negative leads you to pay much more attention to the bad things that happen, making them seem much more important than they really are. We pay more attention to negative events than positive ones. We tend to learn more from negative outcomes and experiences. We even tend to make decisions based on negative information more than positive data. It is the “bad things” that grab our attention, stick to our memories, and, in many cases, influence the decisions that we make.

Never Wear Your Emotions On Your Sleeve

Over the years we have repeatedly advocated against wearing your emotions on your sleeves. A polarised person is the easiest person on the planet to manipulate; it is even easier than stealing candy from a baby.  This is why the crowd never wins. You have to get rid of this herd mentality; just reading about it is not going to fix the problem. An unusually large number of new subscribers gave in to the herd mentality. As we have stated over and over again; individuals beg for stocks to drop in price, but when they do, instead of buying them, they run away, and so continues this vicious cycle

While such actions might have some value if one was living in the jungle, it is a very dangerous reaction when it comes to the markets. The reason it’s dangerous is that the big players understand the effects of fear and negativity very well, and that is why they go out of their way to blow a negative event out of proportion. How often have you seen back to back coverage over a positive event; not often, and now you know why.

Simple Solution To Deal With Negative Thinking

The only way to find a solution is to understand the problem; the masses never look for a real solution. They just want a temporary patch and running from a troubling situation even though the troubling event might not be real is the solution of choice as it’s easy. Well, as they say easy come easy go, and that is why such easy solutions are useless for they provide the illusion of safety while delivering devastating results to one’s finances.

One would have thought by now that an investor that got knocked out once would pull up a long term chart and ask themselves a few simple questions. For example, has panicking ever paid off?  Why then do the masses insist on following a path that is guaranteed to lead to a negative outcome?  The answer is very simple; misery loves company and stupidity simply demands it.

The single one thing any individual could do to improve their investment skills is; let’s start with what it’s not

  • It’s not by learning Technical or pattern analysis and its It is not by learning how to read a company stocks reports
  • It’s not by becoming an expert by studying the fundamentals of a company, or a host of other BS info. that the experts falsely promote

Mass Mindset: Understand what it is 

Understand the mass mindset. The mass mindset is hardwired to panic, and once you understand this (i mean really understand this), you can reprogram your mind very easily.  This is what mass psychology is all about understanding the mass mindset. However, remember that you are part of the mass mindset, so understand who you are and who you were so that you now can formulate a plan on the creation of the “New You”. Technical analysis is very useful but only once you master the basics of mass psychology

New Stock Market developments

Copper continues to put in a bullish pattern, and the pattern is dangerously close to generating a bullish signal. A bullish signal will/should have a positive impact on the overall market. Consider also that the current consolidation in copper has been relatively mild, so the odds of a strong move are quite significant.

The Tactical Investor alternative Dow Theory, states that if the utilities trade to new highs, it is almost always an indication signal that the Dow industrials will pursue a similar route and that’s what’s taking place right now.  For the record, the Dow Utilities soared to new highs in September and so far the Dow is following in the footsteps of the utilities. The transport sector and copper should outperform the markets. While many experts were predicting a crash, we at most were looking for a pullback ranging from mild to wild. However, the long term trend is still bullish, and in such an atmosphere it is dangerous to short a market

Investors flocking into bonds

Vast amounts of money have left the market, demonstrating that the crowd is bailing out at precisely the wrong time. History has never been kind to the masses, and we don’t think the pattern is going to change shortly.

“People are talking about bonds and bond yields like they were talking about Beyond Meat a month ago. You’re talking about bonds trading like high-flying stocks,” he said.

Beyond Meat went public in May at $25, before peaking at $234.90 on July 26. On Monday, it was up 2.9% at $169.11 per share.

“They’re holding their nose and buying,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors. He said some investors are buying out of fear, and they are worried that Fed will not be able to rescue the economy from falling into a recession. “The effectiveness of Fed stimulus has been diluted. There may be a growing argument that we’re driving around without a spare tire. That’s the new fear.” CNBC

The masses beg for better prices, but when an opportunity presents itself, they do exactly the same thing as they did before; panic and flee for the hills and ignore the opportunity.

The Stock Market is mimicking the pattern of 2009; if this pattern completes, it will/should lead to an explosive upward move.

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