The Markets and Magic!
We all know that we are an advanced society. We are the most educated society in history, if one uses college degrees awarded per capita as the criteria. Certainly we have overcome the primitive superstitions that affected the thinking of our ancestors. Their beliefs and behavior are openly ridiculed in our rational society. We would never rely on a technique based on magic or superstition! We have statistics to prove our arguments!
"There are lies, damn lies and statistics" - Winston Churchill (1874-1965)
Yes, we can now scientifically prove anything. This is statistically possible because correlation does not prove causation! Our modern universities have study hustlers telling the grant providers you got the bucks, we've got the study! No more primitive voodoo for us!
We have software programs than can correlate anything to anything else, given the right data base (GIGO). We have supercomputers to do the search in nanoseconds. All is well in world. Any problems that might surface are either the product of flawed perception, or a statistical anomaly . A fast adjustment of your drugs, or a new study will overcome the alleged problem! Positive Thinking has taught us that our wishes will determine the outcome.
What do we really know about Positive Thinking? We have observed that it's the salesman's bible. Some background is in order! Norman Vincent Peale was the first Christian minister to openly embrace the New Age Philosophy. His success at selling self help books is legendary. One could say that Peale created MLM (Multi Level Marketing).
His chief disciple, Robert Schuller (The Crystal Cathedral) created a new formula for expanding his business. How does Dr. Schuller believe we can reach the nonbelievers most effectively? The most important thing is to find out what they want! He did this for several years at the beginning of his California ministry. And what did he discover? He found out that nonbelievers wanted to have their emotional needs met: they did not want to hear about the Bible or about their need for forgiveness of sins and salvation.
Robert Schuller perfected the feel good message so predominate today. He went beyond Peale's Positive Thinking message, and created the Possibility Thinking formula. Schuller's "possibility thinking" replaces truth. It doesn't matter what or whom one believes, but only that one be positive about wanting it!
The lineage of Positive Thinking has evolved into Word Faith (a corrupted version of Reification). Word-Faith teachers claim that God operates by spiritual law and is obliged to obey the faith-filled commands and desires of believers. He not only reveals prosperity teaching supernaturally to the Word-Faith teachers, but personally and verbally confirms their unique interpretations of Scripture (Copeland, Laws of Prosperity, pp. 60-62).
Positive Thinking has now reached the point where we are taught that our commands and desires must be honored by the universe, or God. We have now formally entered the world of Magic. The agenda has been revealed, and there is no way to disguise the premise involved. Logic and facts are out of the equation. We are now confronted with primitives demanding that their wants and desires be fulfilled by the universe, or God.
When the Mayans discovered that their empire was failing, they began conquering their neighbors, holding them as captives, and slaughtering them in rituals in an attempt to control the universe to prevent the further decline of their empire. The Mayans believed in the anthropomorphic concept of so above, so below . Destiny was determined by the Gods. The Mayans tried to reverse this equation by employing Sympathetic Magic. Their primitive logic said if above controls below, then below should be able to control above. The mass sacrificing of their neighbors was a pathetic attempt to influence the heavens to save the Mayan Empire.
Proof of why the universe, or God, must respond to our demands is not presented. I want, therefore you must do, is the ultimate in absurdity when confronting the universe, or God. It is nothing more than a spoiled child's behavior! The question is, why would the universe, or God, care about your demands? The universe is probably more difficult to influence than mommy, or your local congressperson.
The investment markets are another story. Here we see a mechanism that appears to be under our control. After all, we do the buying and selling. Shouldn't we be able to make the markets do our bidding? Here we have an opportunity to apply some serious juju. The wannabe shamans infest many arenas of life, and the markets attract their fair share of them.
The most obvious attempt to use magic in the markets is the use of the chorus. It's going up, it can't go down, always buy, buy, buy, are attempts at manipulating the markets through magic. The laws of supply and demand have not yet occurred to these cheerleaders. Do you see the similarity between the futile efforts of the Buy, Buy, Buy chorus, and the Indian rain dances? If one continues to dance long enough, rain is bound to happen occasionally.
Should the markets start to go lower, another group will start bellowing about the evil manipulators that are controlling the markets. The evil ones are invoking some sort of demonic power that is against truth, justice, and the American way (markets always going up). The fact that markets must go lower in a down cycle appears to mystify this group. The proof of the existence of cycles reduces the collectivists into a pack of howling baboons, and then they begin screaming for more government control of the economy.
Agricultural subsidy programs are a perfect example of the futility of using government power against the forces of nature. The mercantilists con the citizens into demanding that the government act to prevent price drops. The only real power that government has is to purchase the excess crops to prevent the markets from dropping. Should supply increase, the government will increase demand. It sounds so logical. No one seems to notice that the taxpayers are saddled with the tax bill for all this mumbo-jumbo, as the universe is unimpressed with all the "Sound and Fury signifying Nothing"
The curse against selling (remember, always hold for the long run) is another Magic device. By the simply act of cashing out, you will cause the collapse of the economy. Yes, you will cause all the poverty, and emotional distress that occurs when markets confront reality. Heavy guilt is the trick to this device. How can you live with success, when others need so much? If one inquires as to they should buy in the first place, they will be told that is how you support the economy! If you suspect that this argument is circular , you would be correct!
The real witchcraft trials are reserved for those who sell large amounts of securities.
Martha Stewart is the latest victim of the belief that selling one's stocks is a heinous crime against the collective! They trumped up the charge that she sold on insider information. One might just as well charge all successful people with utilization of insider (superior) knowledge. There would be no point in spending the time and effort to learn technique and gain knowledge if one could not personally benefit as a consequence of one's personal efforts.
The question of just how individuals are supposed to remain inane dolts, and yet be successful, is always ignored by the graduates of the Forrest Gump Business School. "It's just luck" is the answer that emanates from the maws of the wannabe shamans, and their chorus. Why don't they just execute all the producers now and distribute the wealth to their vampiric constituency? Destroy all ability and knowledge now, and you can return to the cave to snack on roots, berries, and bugs.
The unspeakable crime of Short Selling! This activity ranks with cannibalism and matricide in the US. The question is why! It is amusing to review the history of the prohibitions on short selling! Short selling (selling stocks you do not own, with the expectation of buying them back at a lower price) was a normal practice in the markets until the Depression of the 1930's. Prior to FDR's dictatorship, all intelligent investors bought, sold, and sold short as the trend warranted!
Franklin D. Roosevelt created the SEC and then proceeded to appoint Joseph P. Kennedy Sr. as its chairman. What is so funny about this maneuver is that Joe Kennedy financed Roosevelt's first election with the some of the money that he made selling stocks short during the stock market break of 1929 through 1932.
In 1938, the SEC adopted the 'uptick' rule which prevented short sales unless the stock had risen on its last trade. This was intended to prevent bear raids from hammering down a stock and was a continuation of a voluntary rule imposed on NYSE members back in 1931.
This, of course had no practical result, as supply and demand determine prices. The only thing this rules accomplishes is preventing many people from profiting on the correction from fantasy to reality that markets must go through to remain functioning. The wannabe shamans will always beats their breasts, and swear vengeance against those too smart to be destroyed when the market delusions vanish!
What did Bernard Baruch have to say about the bullish perspective, and their never ending attacks against short selling?
Bulls always have been more popular in this country because optimism is so strong a part of our heritage. Still, over-optimism is capable of doing more damage than pessimism since caution tends to be thrown aside.
To enjoy the advantages of a free market, one must have both buyers and sellers, both bulls and bears. A market without bears would be like a nation without a free press. There would be no one to criticize and restrain the false optimism that always leads to disaster."
Congressmen and regulators are just wannabe shamans by another name. Don't let their secular disguise deceive you! It wasn't long ago that your leaders were wearing loincloths, strange headdresses, had bones in their noses, and were dripping blood from their teeth! Today, we have better looking shamans, compliments of Max Factor, Vidal Sassoon, Clairol, and cosmetic surgery. For further proof, see Michael Jackson.
When will this insanity end? Why are we still reverting to primitive beliefs in magic, and being manipulated by group pressures? Bill Bonner put it very well in a recent article
"People don't really think, you know. Well, maybe some do. But 99% of them only feel their way forward in life. It works well enough in personal life, where the stakes are high and the punishment is near. Like driving down the road at 80 mph, you can't afford to have too many illusions. But in the public sphere, illusions are all over the place. They're cheap - you can believe anything you want to believe - even that you can make the world a better place by telling people half way around the planet what kind of government they should have - without penalty. It costs you nothing, other than a few friends, maybe, to have the most extravagant fantasies and opinions. That's why there are communists. And Democrats."
Gustave Le Bon said it differently in The Crowd: A Study of the Popular Mind.
"Reason is an attribute of humanity of too recent date and still too imperfect to reveal to us the laws of the unconscious, and still more to take its place. The part played by the unconscious in all our acts is immense, and that played by reason very small. The unconscious acts like a force still unknown."
The markets themselves are actually very simple, but the propaganda and Magic techniques used against your mind will first confound you, and then will wear you out! Why does the chorus of the markets (not the markets themselves) disrupt you, and almost always lead to bad decisions?
A recent article in the WSJ may help you understand why the news, and the commentators have this effect on most investors.
People with certain kinds of brain damage may make better investment decisions. That is the conclusion of a new study offering some compelling evidence that mixing emotion with investing can lead to bad outcomes.
Some neuroscientists believe good investors may be exceptionally skilled at suppressing emotional reactions. "It's possible that people who are high-risk takers or good investors may have what you call a functional psychopathy," says Antoine Bechara, an associate professor of neurology at the University of Iowa, and a co-author of the study. "They don't react emotionally to things. Good investors can learn to control their emotions in certain ways to become like those people."
" There was no such thing as stock in the Pleistocene era," says George Loewenstein, a professor of economics at Carnegie Mellon University, and a co-author of the study. "But human beings are pathologically risk averse. A lot of the mechanisms that drive our emotions aren't really that well adapted to modern life."
The Brain-Damaged Investor
Unusual Study Explores Links
Between Emotion and Results;
'Neuroeconomics' on Wall Street
By JANE SPENCER
Staff Reporter of THE WALL STREET JOURNAL
July 21, 2005; Page D1
This study suggests that your primary emotion is fear. This explains the success of all the techniques that are applied against most of the population. Any hint of a problem, and you go into mental confusion, and psychological turmoil. You are wired this way. Your internal conflicts will prevent you from making the correct decision at the correct time! Most people will take refuge in the opinion of the group. This is the dirty little secret of group psychology and sympathetic magic. They use your fear and your greed against you! You are afraid to even think that your investments won't make you rich, and terrified that you might lose your money. Any exposure to the financial media will have you alternating between fear and greed. This is not a coincidence, as the articles and sound bites are written for the maximum emotional impact.
I close this article with the hope that the reader will see the true battle that goes on outside of the markets, and the incredible degree of manipulation that is continuously sent out to influence our decisions on the conscious and subconscious levels . It's not an overstatement to say that the average investor has unwittingly become involved in psychological warfare without the appropriate training to win the war.
"I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain." --- Frank Herbert, Dune - Bene Gesserit Litany Against Fear