3/7/2011 1:02 PM ET|
A market crash in 2011? Count on it
The bullish forecasts are dangerously wrong. Psychologically, it's hard for investors to ignore the happy talk and pull back from the market, but they should do so soon.
Politicians lie. Bankers lie. Yes, they're liars. But they're not bad; it's in their genes, inherited. Their brains are wired that way, say scientists. Like addicts, they can't help themselves. They want to sell stuff, get rich.
We want to believe they're telling the truth. Silly, huh? We're trapped in this eternal "dance of death," controlled by programs hidden deep in our brains, telling us what to do, telling us to ignore contrary facts -- until it's too late, until a new crisis crushes us.
Psychology offers a powerful lesson: Our collective brain is destined to trigger a crash before Christmas 2011. Why? We're gullible. We keep searching for truth-tellers in a world of liars. We let them manipulate us into acting against our best interests.
In fact, behavioral science tells us that bankers and politicians are lying to us 93% of the time. It's 13 times more likely that Wall Street is lying to you than telling you the truth. That's why they win, and why we lose. Our brains are programmed to cooperate in their con game.
One of America's behavioral finance gurus, Richard Thaler of the University of Chicago, explained it this way: "Think of the human brain as a personal computer with a very slow processor and a memory system that is small and unreliable."
Thaler is a quant who speaks mostly in cryptic algorithms. So if you really want to know how Wall Street's con works, listen to Barry Ritholtz, the financial genius who wrote the book "Bailout Nation."
Ritholtz summarized things in a Feb. 6 column in The Washington Post. "We humans make all the same mistakes, over and over again," he wrote. "It's how we are wired, the net result of evolution. That flight-or-fight response might have helped your ancestors deal with hungry saber-toothed tigers and territorial Cro Magnons, but it drives investors to make costly emotional decisions."
Humans have something "akin to brain damage," Ritholtz continued. "To neurophysiologists, who research cognitive functions, the emotionally driven appear to suffer from cognitive deficits that mimic certain types of brain injuries. . . . Anyone with an intense emotional interest in a subject loses the ability to observe it objectively: You selectively perceive events. You ignore data and facts that disagree with your main philosophy. Even your memory works to fool you, as you selectively retain what you believe in, and subtly mask any memories that might conflict."
Worse, there's no cure.
Examples: USA Today headline: "Average bull is 3.8 years: We're not at 2 yet." More upside. Wall Street loves it. And from The Wall Street Journal: "Stock recovery in high gear . . . S&P 500 now speeding toward its next landmark."
Other lies: Inflation and rising interest rates won't push China and America over the edge and into a new bear recession. That one is popular in Wall Street's echo chamber. Wall Street also cheers every time cable TV pundits and journalists repeat this favorite statistic: Stocks rally in the third year of a presidency, often more than 20%.
The biggest lie? Perennial bull Jeremy Siegel of "Stocks for the Long Run" fame recently told a TD Ameritrade conference, "There's nothing but upside to come (and) the next several years are going to be good for stocks."
Yes, one of Wall Street's favorite co-conspirators is hypnotizing thousands of our best money managers and advisers into believing the lie that this bull market will roar indefinitely. Worse, they in turn will use that message to sell naive investors on whatever junk Wall Street is selling.
Get the picture? A little conspiracy begins in your head, a conspiracy between your gullible brain and Wall Street's con men selling hype, hoopla and happy talk. Listen and lose.
Warning: This little conspiracy is a retirement killer. So listen to some highly respected contrarians. They're short-selling this conspiracy, betting that 2011 will hit headwinds before Christmas, turning a cyclical bull rally into a cyclical bear market.
Remember, we can't help it. Our brains are defective, biased, manipulated by unseen forces. So blame all the lies, lying and liars on our brain wiring. A perfect excuse. Sure, political dogma and insatiable greed factor into our bizarre mental equations.
Go back a few years: The subprime credit meltdown was widely predicted. In 2007, for example, the IMF's chief economist, Raghuram Rajan, warned the world's top bankers that financial markets were headed for doom. But they laughed it off.
VIDEO ON MSN MONEY
"We're trapped in this eternal "dance of death," controlled by programs hidden deep in our brains, telling us what to do, telling us to ignore contrary facts -- until it's too late, until a new crisis crushes us."
Mainstream media including MSN is equally guilty of these things as well. Who are you people trying to kid, eh? You headline Lady Gaga while genocide rampages though Africa and Eastern Europe. You headline Justin Beiber while food prices skyrocket, you headline Charlie Sheen while tent cities for the homeless boom throughout the U.S. You, MSN are the Newspeak in Orwell's 1984. Oh, one more thing; I have not forgotten about how MSN denied, neglected, and played down all warnings and the indications of the crash of 08.
This article is most likely approved because more people are moving away from bs corporate control media and paying attention to independent media that has been talking about this situation since 2009. Nice try, MSN but people are catching on to the games mainstream media plays and your actions to suddenly present an article like this is just a mere joke in the eyes of many. Know this, MSN; "Goldstein's" committee is watching you too.
"Those who don't remember the past are condemned to repeat it" The German Republic in the early 1930's printed money until it was virtuously useless. There are pictures of what were once wealthy Germans with wheel barrels of paper money going to market to buy one loaf of bread. (Think this can't happen here?) The Federal Reserve is printing money hand over fist daily. It is supply and demand. When the Fed. has created more false bank notes than we can credit, I hope all you people who have $450,000 saved up, can afford to buy a wheel barrel! Once we understand money as a currency (Money you made yesterday will loose its value over time) we should see the writing on the wall. In 1967 my Dad bought a brand new Ford Galaxy for $1,950 he made far less then he would today but that smaller paycheck had more value than a bigger check today! Just wait till the next shoe drops. Can you say Inflation?
Considering the facts that we have been printing money non-stop since early November and the current administration had just run-up the biggest deficit our country has ever known (by a huge margin), inflation is a given. Holding interest rates down artificially, as we are now doing, will only put us further behind the 8-ball and keep us totally unprepared.
The author may be wrong on his time-frames but he is absolutely right about what will ultimately happen. The current administration has structured the payments for the insane levels of spending it has enjoyed so that those payments will not come due until 2013 (after the next presidential election). My guess is that sometime during the first quarter of 2013, it will hit the fan and the piper will come to understand that he isn't going to get paid. If you think the dollar is being devalued now, just wait until we begin to hedge and default . . . toilet paper will be worth more than the U.S. dollar. One more thing folks . . . don't believe for one minute that any of this was accidental . . . it wasn't and it is going exactly according to plan!
Finally someone says how it is. The question is, what is his motivation?
It'll correct, then they'll print more money, then it'll go up again, then it'll correct, then they'll print more money, then it'll go up again, then it'll correct, then they'll print more money,
"Irresponsible Journalism! Why would MSN publish this trash? The sky is falling, the world is coming to an end. Bunk, total bunk. But, some people will feed on it with the negative doom and gloom outlook, that is what is so sad." -SaltguySpoken like a true politician that's backed by Wall Street during an interview with CNN. Please return to the stone age where you belong. People who know what is really going on, unlike you obviously, do not see this as the end of the world. It's not the end of the world, its the end of a economic system where few have everything for doing nothing and many have nothing for doing everything. Any idiot who believes or wants this economic system of greed and slavery to continue deserves to die with it.
So true, so true! Wake up! If you think that these individuals are honest and you are oblivous to the ride that they are taking you for; I fell sorry for you! These people don't care about you! All they are interested in; is lining their pockets with your hard-earned money. I hate to say "I told you so", but for some, that is going to be the reality of it! Fairwarning; watch out for the "kings" using you as "pawns"!
Count on it.
behavioral science tells us that bankers and politicians are lying to us 93% of the time
That's a really dumb statement - but about par for the article.
Suppose it were true. Wanna know how to get the truth 93% of the time? Just believe the opposite of what they tell you.
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