Category Archives: Psychology

Politics, Psychology and Investing

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shadow

Robot-48x48There are 3 Things in the title.  Thing 2 is a big key to managing markets and being successful at Thing 3.  Thing 1, while a consideration to the extent that it affects policy and structural macro issues, can get people all screwed up with respect to Thing 2, thereby hurting their chances with Thing 3.  As noted in an article last April, it is vital for investors to deprogram themselves, especially when it comes to politics.

To the extent I went over the top with the theatrics after the election, making light of fully erected Trump Towers (vertical stock charts of the ‘Trump plays’) and whatnot, I got out of line with my normal mode, which is to tune it all out.  But hear me now; the Trump phenomenon was very good for me because it opened up a wellspring of psychological inputs I can work with.  The gentle, firmly entrenched Obama whispering lullabys to us for 8 years?  A snooze fest.

With Trump, politics are not involved in my market view but psychology surely is.  Fiscal (Trump admin) as opposed to monetary (Bernanke/Yellen Fed under Obama) economic manipulation may work or it may not.  But it is just a different form of government policy trying to will an economy to do what they want it to do.  I’ll just stay open minded because… psychology. (more…)

2016: A Year for Contrarians; 2017 Shaping Up That Way as Well

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alice2016 was the year I finally decided to codify my niche as a psychology-focused market contrarian, putting the Alice, Red Queen and Rabbit components of NFTRH’s logo right there on my inner forearm, forever.

This is because I love the imagery and themes of NFTRH’s guiding metaphorical story, Alice in Wonderland, and because the weird technical tools I use are generally in service to one thing; being right when the herds are going the wrong way. The concept originally came to me as the markets were beginning their descent into the crash of 2008 as the newly launched market management service needed a view that was apart from the emotional herds then preparing to go down the drain. Alice’s quote (Lewis Carroll), a portion of which occupies my other inner forearm was perfect in this regard…

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”

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Manipulators, the PPT and Peter Pan Send the Stock Market Higher

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by Avi Gilburt, ElliottWaveTrader.net

“You can fly, you can fly, you can fly” – Peter Pan

It seems that, once again, the stock market rally has taken most by surprise. Yes, the US stock market has been making new all-time highs, and everyone seems to be scratching their heads. In fact, I believe we recently even witnessed a Dow Theory confirmation of this stock market rally.

The common recent expectation was that a Trump win was going to crash the markets. In fact, when the market headed higher against a particular analysts’ expectations, he ridiculously claimed that the current equity market rally is a “manufactured rally” for the sole purpose of allowing big money to “escape the market,” only for Obama to then cause a big crash in the stock market before Trump’s inauguration in order to “hand him as big a mess as possible.” You just can’t make stuff like this up. And, amazingly, there are investors that follow this “analyst,” but clearly with a lot less money now in their pockets.

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Bonds: 90% of You Are Herding

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90% (my low-balled estimate) of you, the investing public, are herding when it comes to the bond market.  You may not know it because the overwhelming psychological atmosphere is to reaffirm, not question peoples’ behavior.  That is what herding is; a comforting feeling of going with the flow and being at one with your environment and the greater zeitgeist.

Now, please don’t be offended by the title; you dear reader may well be one of the 10%.  But out there in the financial investment realm, they are herding, BIG time, as bond yields are expected to continue rising, because… media; because“Great Rotation, part 2” and because… the story of epic secular changes and the chance to be early and clued in to a great new market phase are so alluring.

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