Negative Thinking: How It Influences The Masses

Negative Thinking

Negative Thinking and how it affects your investments

Updated March  2023

When the trend is positive (UP), train yourself to view strong pullbacks, corrections and other adverse developments through a bullish lens. Anyone can panic in the face of trouble, but only astute individuals 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

And that is due to the brain’s “negativity bias”: Your brain is 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, PhD, then at Ohio State University, now at the University of Chicago.

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

In his research, he presented participants with various images carefully selected to evoke positive emotions (such as a Ferrari or a pizza), negative emotions (such as a mutilated face or a dead cat), and neutral emotions (such as a plate or a hairdryer). Simultaneously, he measured the electrical activity in the brain’s cerebral cortex, which reflects the level of information processing. Cacioppo discovered that the brain responds more strongly to stimuli it perceives as negative, exhibiting a greater surge in electrical activity. As a result, our attitudes and perspectives are more profoundly influenced by negative news and experiences than by positive ones.

Media Purposely pushes The Negative Thinking Concept.

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

For instance, let’s say you’re having a productive day at work, and everything seems to be going well. However, a passing comment from a colleague bothers you, and it becomes the focus of your thoughts for the rest of the workday. When you return home, and someone asks about your day, you describe it as terrible, even though the incident was just a small part of an otherwise positive day.

This tendency to lean towards the negative causes us to give more weight to unpleasant events, amplifying their significance. We tend to pay more attention to negative occurrences than positive ones, and even when making decisions, we are often influenced by negative information more than positive data. It’s the negative experiences that capture our attention, stay in our memories, and sometimes shape the choices 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 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. A huge 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 perilous 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, so they go out of their way to blow an adverse 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 want a temporary patch, and running from a troubling situation, even though the problematic 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 guaranteed to lead to a negative outcome?  The answer is very simple; misery loves company, and stupidity simply demands it.

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

  • It’s not by learning Technical or pattern analysis or how to read a company stock report.
  • 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 easily reprogram your mind.  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 can now formulate a plan for creating the “New You”. Technical analysis is instrumental, but only once you master the basics of mass psychology.

New Stock Market developments

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

The Tactical Investor alternative Dow Theory states that if the utility trades to new highs, it almost always indicates 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 it is dangerous to short a market in such an atmosphere.

Investors flocking to bonds

A significant amount of capital is flowing out of the market, indicating that the majority is abandoning ship precisely when they shouldn’t. Throughout history, the masses have seldom fared well in such situations, and we do not anticipate this pattern changing anytime soon.

“People are discussing bonds and bond yields in a manner reminiscent of how they were talking about Beyond Meat just a month ago. It’s as if bonds are being traded like high-flying stocks,” remarked Jack Ablin, chief investment officer at Cresset Wealth Advisors.

Beyond Meat, a company that went public in May at $25 per share, experienced a peak at $234.90 on July 26. Currently, it is trading at $169.11 per share, with a modest 2.9% increase on Monday.

Ablin further noted that some investors are reluctantly buying bonds out of fear, expressing concerns that the Federal Reserve will be unable to rescue the economy from a potential recession. “The effectiveness of Fed stimulus has been diluted. There’s a growing argument that we’re driving without a spare tire. It’s a new fear that has emerged.” .” CNBC

The masses beg for better prices, but when an opportunity presents itself, they do precisely the same thing as before; panic, 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.

Originally published Oct 30, 2019

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