All Episodes
Previous Next
March 14, 2018 - Health Ranger - Mike Adams
28:52
Greed, Fear and the Psychology of Every Market Crash
| Copy link to current segment

Time Text
I want to bring your attention to a very informative graphic.
It should be displayed here as you're listening to this, if you're watching it on YouTube or Vimeo.
If you're just hearing this as a podcast, find this video on YouTube of the same title as the podcast so you can see this graphic.
But I'll describe it to you.
It is, it's a line that shows valuation versus time.
And it's a description of the mental phases that happen, the sort of the mood, the faith, the perceptions, the expectations that happen in every market bubble and crash in history.
It's because it's the same cycle over and over and over again.
It's so, it's so pathetically predictable and yet so many suckers fall for it every single time.
Let me assure you folks, nothing has changed.
We're in a massive bubble.
It's a massive stock market bubble, a bond bubble, a real estate bubble, an expectations bubble, and it's going to come crashing down, certainly within Trump's first term, but 100% is that it is inevitable because the valuations are so high and so overblown and so rooted in delusional thinking.
So check out this graphic.
The source of this is Dr.
Jean-Paul Rodriguez, the Department of Global Studies and Geography at Hofstra University.
And this shows basically, well, four phases of every bubble.
There is the stealth phase, the awareness phase, the mania phase, and then the blow-off phase.
So let's talk about these four phases and who's getting in and what are the moods and what's going on.
Because what's crucial here, the whole point of me sharing this graphic with you is that I want you to work with me here and realize that where we are right now.
As we go through this, sort of test yourself and see if you can figure out where we are right now in the stock market valuation bubble.
Okay?
Sorry to explain that very well at first.
But this is all unscripted.
We don't use teleprompters here.
So stealth phase is where an idea takes off.
It might be a company idea or an industry idea like the dot-com industry or the subprime housing market industry, what have you.
So the stealth phase, it's just getting off the ground.
The public hasn't really heard about it yet.
And so-called smart money is getting in on the ground floor.
And the idea starts to take off, and it's gradually starting to accelerate upward.
Then it goes into the awareness phase, and this is where institutional investors get in.
Those are investors who are investing, for example, pension money or mutual fund money or big money made by corporations like Apple or Microsoft that are trying to figure out how to make their money grow because they have so many billions of dollars.
From all of the slave labor and prison camp labor that they've used, by the way.
But Microsoft uses prison camp labor and Apple uses essentially slave labor to make all that money.
So they've got to figure out where to put it.
And they're putting it into this idea.
Whatever idea is represented by this chart, you know, pick your idea.
And now it's starting to really take off more and more.
The institutional investors are getting on board.
Now, there's a sell-off that happens when too many institutional investors get worried about it.
There's a bit of a gentleman's overzealous perception, you might say.
And they buy too much of the stock, the price goes a little too high, and they fail.
Somebody figures it's overvalued.
There's a little sell-off.
And after that sell-off, it starts to recover.
As it surpasses the previous high, then it goes into the mania phase.
And this is where things start to get really exciting.
The media picks up on it.
The media starts to cover this idea, whatever it is, this company, the dot-com stocks, you name it.
And then the public starts to get involved.
And the public, for the first time, reaches, the people reaching their own wallets and they start buying these stocks.
And what happens is the stocks start going up like crazy.
Suddenly they're making money, they think, in their minds because they don't understand how the stock market works.
You don't make money until you sell, by the way.
Holding a stock that's getting more and more valuable is not making money.
That's just delusion.
Until you sell it, you haven't made jack.
So the stock price is going up and these people think they're making money and they tell their friends.
Or maybe Jim Cramer tells you on CNBC or wherever he's working now.
I don't even know.
The media gets involved.
You start hearing about it on the mainstream media, you know, the financial media, which is just basically propaganda for suckers.
By the time it gets to broadcast television, you're too late, folks.
Just sort of giving you a little bit of wisdom there.
If you heard about a stock tip on CNBC, you're the sucker.
You're what's called the greater fool.
If you're buying stocks off of Jim Cramer.
Alright, so anyway, the public starts going crazy for it.
The price keeps going up and up and up.
And we're getting into the enthusiasm stage.
And then we hit what's called the greed stage.
Ooh, the greed stage.
This is where people start thinking...
Ooh, they could retire.
They don't have to work anymore if they could just buy enough of this stock and have it double or quadruple again, as it already did.
So they start telling all their friends, buy more, buy more, because they already bought some, and they want the price to keep going up.
It's in the greed phase, and they're making money hand over fist, they think.
And their bank account keeps getting bigger and bigger and bigger, they think, but it's all illusion because it's just digital numbers that can vanish in an instant.
But they don't know that because they're suckers, and they're fools, and they've been watching CNBC. They think they're going to get rich, right?
So...
This keeps skyrocketing through the greed phase.
More and more people get on board.
And the problem is that the delusion is strengthened by the evidence that it's working.
So these people who got in kind of at the early media attention phase, they're making money, they think, hand over fist.
So they have a reinforcement of their bad decision.
They think they're making money and it's going great.
And it never occurs to them, by the way, they should sell.
You know why?
Because they always think it's going to go higher.
And why is that?
Because they're suckers.
Yeah, they're the greater fools.
They're the ones that always get burned in every dot-com crash.
Look, I was warning people in 1998, 1999, and 2000 to get out of the dot-com market.
I warned people directly.
Publishing online.
Telling people, it's going to crash.
It's going to crash.
And of course, everybody was going, you're a doomsday person.
Stop being negative.
It's a doom and gloom.
You're a doom and glimmer.
And the markets kept going up and I kept telling people, sell, sell, sell, you freaking fools.
You people are so incredibly foolish.
Just sell.
You'll thank me later.
Trust me, sell.
And nobody sold, of course.
Nobody sold.
So then it reaches the delusion stage.
It starts skyrocketing, just shooting through the sky.
The price is going insane.
Now these people, these delusional people who have been reinforced for their greed and their bad decision-making, they think they're making a fortune now.
No longer are they thinking about they're just not going to have to work for the rest of their lives.
They're now thinking about a private jet and driving some kind of fancy...
What is a fancy car?
I don't know.
I don't even know what is a luxury car.
To me, like a Lexus is a luxury car.
What's beyond that?
I don't know.
I don't even know.
Jaguar?
All right, so they're thinking about driving a Jaguar, let's say.
Maybe they think that's a luxury car.
Whatever.
They're having visions of lifestyles of the rich and famous in their heads as they're looking at these valuations in the stocks.
And they're going crazy and they're thinking, ah, I'm never going to have to work again, blah, blah, blah, blah.
Because they think, they believe the Jim Cramer nonsense that, oh, everybody can get rich by trading pieces of paper with each other that have higher and higher numbers on them.
And they think that this is how economies grow through delusion and the sharing of delusion.
All right, so now then, this keeps going.
The delusion is amplified.
It's reinforced.
It's shooting skyward.
It's through the stratosphere.
The next thing that happens is you start hearing people say, oh my God, it's a whole new paradigm.
It's a new paradigm.
The rules of accounting no longer apply in this case.
This is what you heard during the dot-com boom.
The rules of earnings and customers and profits, they no longer apply.
You don't even need earnings anymore, they said.
All you need is eyeballs.
Eyeballs looking at the screens.
Just eyeballs looking at the screens and then you have valuations.
That's all you need.
Brand new paradigm.
This is what they said.
I mean, serious.
Sorry, I have to wipe the slobber off the microphone.
Here's a little Sylvester the Cat impersonation doing Jim Cramer.
If you can imagine Sylvester the Cat doing Jim Cramer on live television, it's a little sickening, I agree.
But let's not go there.
Okay, so the new paradigm blow-off, blow-out is happening.
Uh, and, uh, now people are really convinced that the rules have changed and they, they, they tell each other this, oh my God, it's like, nobody even ever needs to really have any customers anymore.
It's like the accounting rules are just totally shifted now.
It's like, you can just create money by just thinking of it, just ideas like, oh my God, it's so amazing.
Oops, oops, sorry, I went into a little bit of Aussie accent.
So amazing.
It's so amazing when the socks just keep going higher and higher.
Pretty soon you just got to stand and go home, don't you now?
Sorry, I've had too much caffeine, I'm sorry.
I went from Valley Girl to Australia and then ended up in New Zealand on that one.
I apologize in advance.
Anyway, the new paradigm stage, it's a blowout, and of course it's unsustainable.
This is what eventually happens in every bubble and then crash.
It's unsustainable.
At some point, some people have an inkling of sanity at the top, and they say, wait a second, this looks kind of overbought.
Maybe we should sell and take our profits.
And all it takes, this is the magic of the bubble, well, really the mathematics of the bubble.
All it takes is literally less than 1% of the stockholders to realize that it's a great selling opportunity to start the crash.
So quite literally, the valuations that keep going up and up and up, it depends on over 99% of the people having an expectation that prices will continue to rise.
Because the minute even just 1% of the current holders start to sell, And that's a general figure.
Depending on the volume, the trading volume for that stock, it might be 0.7% or 1.2% or what have you.
But just roughly around 1% of the current stockholders decide to sell.
The thing starts to tank.
It starts to crater.
It starts to collapse.
Now it's going down.
Suddenly it's plummeting.
And suddenly, well, people are taking profits.
The smart people are taking profits.
And then the rest of the people who are currently holding the stock are in a state of what?
Denial.
Denial.
They don't think that this is anything to worry about.
They already made so much money in their minds, they're just gonna hold it, wait for it to correct this little downward blip.
It's a buying opportunity.
That's what you'll hear on CNBC. It's a buying opportunity.
I mean, how could it ever go back down to where it was before?
It's a buying opportunity.
Get more DrCoop.com stock.
Get more Excite stock.
That was a stock that plummeted to zero percent.
I mean, it plummeted to like zero dollars after the dot-com crash, or near zero.
Let's just tell you, it was a buying opportunity.
Keep buying.
So then it oversells a little bit too much.
Some people buy back in.
There's a little bit of a rise.
It's called return to normal.
Now they think, oh, we're back on the upward trend.
Keep buying.
But by this time, some of the more savvy investors have realized, hey, the jig is up.
This thing is not going to keep going up forever.
We're out.
So now the big selling begins in larger numbers.
Now you might have 2%.
The stockholders start to sell, or 2.5% or 3% start to sell in a given period, like a week or two weeks or a month even.
Now the stock starts to plummet.
It's going down, down, down, down, down.
And now what strikes people, this is the key emotion to understand.
If you understand this emotion, you can survive any market bubble.
The emotion is fear.
Fear kicks in and people panic.
Fear leads to panic.
And when people panic, they sell at any price.
This is where they say, sell at market.
Sell at market.
Whatever it is, just sell it.
Just get me out of it.
Get me out of it.
And they sell at market.
Now, because of that, it accelerates the downward trend in the valuations.
And the price of the stocks keeps falling more and more quickly.
So you're now in an accelerated downward trend, like a rock falling to the planet, being accelerated by gravity.
It's faster every second than it was in the previous second.
Now it's plummeting.
It's going down, down, down.
It's rapidly accelerating.
Now you have...
You reach...
When it drops below...
Even the value of the hard assets in the company.
It plummets.
It keeps plummeting.
And it drops below even the rational value.
This is where people hit what's called despair.
And in despair...
It's also sometimes called blood in the streets.
This is when everybody that's driven by fear, who was once driven by greed, is now selling everything.
Getting out.
Because they've lost so much and now they can't stand and lose anymore.
So they just have to sell at any price.
It's despair.
They're ruined.
Their dreams of having a private jet and a private limo and a limo driver are shattered.
Oh my God.
Shattered dreams.
Because they literally thought they could create wealth from nothing.
That's just delusional thinking.
But that's what you get for watching the financial press on TV. So now they're in despair.
And the price will become artificially low.
It will go lower than it should.
It will go lower than the valuations would even call for.
At that point, you get the rescue buyers to come in and say, Wait a second.
You know, that building is worth something.
You know, the customer email list is worth something.
You know, the inventory in the warehouse is worth something.
So they'll go in and buy low where it's like everybody's in despair and there's blood in the streets.
Everybody's oversold it to a point of near collapse.
These smart, savvy investors at the very end will come in and just buy it for the hard assets.
You know, buy the stock because the company's worth something.
They have a fleet of delivery trucks or whatever.
And that kind of buying is rational, reasonable buying.
That's by people who do the numbers and look at the books.
They're like, yeah, it's worth, you know, 47 cents a share.
We'll offer you 23 cents.
This is the way they work, and they get a great deal, and they actually make money on this.
And then, so it slowly rises up to where it should have been in the first place, which is a slow, steady, reasonable growth over time.
So the entire bubble, which was this massive greed and elation and then delusion and then the new paradigm, became panic and fear and despair.
And then it returned to normal because, why?
Because mathematics works.
I mean, the laws of economics cannot be tricked.
They can be temporarily suspended or covered up a little bit, but in the end, you can't stop them.
And so, my question to you as I pose at the beginning of this is, where are we in this curve right now in the U.S. stock market?
And my answer to you is that we are in the delusion stage.
We're close to the new paradigm stage.
Not quite there yet.
We're in the delusion stage, I would say, transitioning to the new paradigm stage.
In other words, the delusion part of this is all of the BS quantitative easing, the Federal Reserve money creation that got pumped into the market over the last eight years since the 2008 near global collapse of the economic system when the Fed stepped in and, quote, saved the world by printing money, which, by the way, will ruin the world when it all comes for that That day of reckoning arrives.
So we're in the delusion stage, but we're heading towards the new paradigm stage, which is the Trump euphoria paradigm.
And what's happening is the market has gone up like 12% since Trump took office, and a lot of people are justifying the additional new paradigm thinking by saying, well, hey, Trump's going to make America great again.
Therefore, the market could just go up another...
1,000% over the next eight years.
What they don't realize is that the market where it is now is built on a bubble.
So if you take a bubble and you stick a little optimism on top of it and get a little bit of a rise out of the optimism, it doesn't mean the bubble isn't there anymore.
The bubble is still there.
The bubble is still toxic and dangerous to the economy and dangerous to the stock market.
The bubble will rear its ugly head soon.
And so when that happens, you're going to have fear and panic.
And so these are really the two emotions, of course, of every bubble.
It's greed and fear.
If you want to break it down to just two things, it's greed and fear.
And greed is what makes people drive up asset prices to an irrational, unreasonable level, of course.
And then fear is what causes them to drive it down at an accelerating rate of panic to irrationally low valuations that are less than what could be justified.
So if you understand greed and fear, then it's very easy to see these things coming, as I've predicted many, many times.
So the public is in greed, and greed is an irrational, selfish belief that all the rules of history no longer apply to you.
Because why?
Because you're special!
You're a snowflake!
You're special!
So all the people...
Think about this.
To believe that That you're special and that the stock market is going to keep going up and that there's not going to be a crash.
You have to believe that in all of human history of all the boom and crashes and busts that have taken place, that all those people who were your ancestors are total idiots.
They had no idea what they were doing.
Oh my God, how could they have been so stupid to...
To go into the railroad bubble and the railroad crash or the tulip bulb crash.
I don't know what year that was.
1600 something?
I don't know.
How could they have believed in the.com boom and crash?
So these young investors today, they literally think that they are special and that everybody who lived before them was a complete idiot and that's why they were tricked into losing all their money in the market crashes.
But now it's different.
It's so different.
Oh my God, the rules have changed.
It's a new paradigm, remember?
Everything's different.
We're just so much smarter now.
The rules don't reply.
We have computers and stuff.
With social media, the valuations are higher.
This is what they tell themselves.
And this, you know, it's what the railroad people told themselves back in, I don't know, what was it, the mid-1800s, what have you.
Railroads are going to create unlimited new prosperity by connecting industrial points of production from city to city.
You know, it's like all these people got screwed on the railroad investments.
Why?
Were they more stupid than people living today?
No.
They're just as smart.
It's that greed and fear, it's a seductive trap of human psychology, and human psychology has not changed since the 1600s and the 1800s and the dot-com bubble of 2001.
Psychology is the same.
Trust me, if any of you are young millennial investors listening to this, you are no different and you are certainly not special by default.
If you want to be special, you have to resist the trap of human psychology that has ensnared so many people before you and will continue to ensnare so many people after you and that is now going to cause many, many people to lose everything or their retirement and what have you.
In the coming stock market crash because the fear and the panic will soon dominate the emotional landscape of assets in America, of equities.
It would be a better term.
Yes, it will be fear and panic and blood in the streets and institutional investors leaping off tall buildings with no parachutes.
This is what you will see.
You're going to see skulls cracking on sidewalks Because people are so blind to the fact that they are still subject to human psychology.
They're so easy for the press to manipulate.
And they are so self-assured of their own brilliance and their own advancement.
Oh, my God.
And yet, in that, their arrogance will get them financially murdered, basically.
It's so pathetic, but it's so easy to see this.
It's the same pattern of human history and human psychology repeated over and over and over again.
Sometimes people say, I was on a radio show the other day, people were saying, are you psychic?
And I'm like, no, what do you mean?
Why would you think I'm psychic?
Never claimed to be psychic.
They're like, no, you always know your analysis is spot on.
You know what's coming.
You know what's going to happen.
You know, you're right again and again.
Are you psychic?
No, I'm not psychic.
It's the same pathetic pattern over and over again.
No, you don't have to be psychic.
You just have to read history.
And you don't even have to go back very far for the market crash.
Just go back to 2001.
Just study the dot-com boom during the Clinton administration in the 1990s.
Read all the news stories back then that said, oh my God, everybody's going to get rich.
I remember, I mean, there were books out.
I think the American Enterprise Institute guy wrote a book.
It was like, oh, the Dow's going to be 36,000.
And, you know, just because of the dot-com stocks going up forever for no reason, even though they had no revenues and many of those companies had no business model, nothing.
It was just like eyeballs are all that matters.
It just kept going up.
And I warn people, it's going to crash.
This is not a debate.
I'm not debating you.
I'm not saying that I think it's going to crash.
I'm telling you.
It's going to crash because the laws of economics have not been overruled by your enthusiasm for fake valuations.
It's like if you launch a satellite, or let's say a spacecraft, toward the planet Mars, And it's on the way to Mars, and it's headed on an intersect course from Mars, but it's still, say, 10 million miles away.
I can tell you mathematically, hey, it's going to hit Mars.
Why?
Well, there's gravity.
There's vectors of motion.
There's momentum.
There's Newton's laws.
I can tell you, I can do the math, that that spaceship is going to hit Mars.
And then, but people will argue with you.
Why are you so negative?
We should say it won't hit Mars.
We should say that Mars will be a nice planet and our spaceship will be embraced by a tolerant, a tolerant heavenly body.
Which is what, that's what the word planet means in Latin.
Oh, this is too funny.
But I'll tell you, no, the probe is going to hit Mars.
I'm just telling you, if you have put money on that spacecraft, you're going to lose the money.
You should pull out now.
You're not going to do well on this deal when that thing hits Mars and collides with terrain, as we say in pilot training school.
Yeah, spacecraft encountering terrain at high velocity usually doesn't turn out very well for the spacecraft, although the planet is typically just fine.
NASA already found that out after crashing a couple of other spacecraft into Mars, by the way.
They're really good at that.
Occasionally they actually land one on a planet, but usually they just crash it into the planet because they didn't understand the metric system.
That's what happened last time.
Anyway, that's a different topic.
The point is, I can do the math.
I see the patterns of history.
This is not difficult to predict.
If you are still holding on to greed and delusion, when this thing breaks, you're going to get ruined.
So, if you have an opportunity...
To get out of this market before this crash comes.
I suggest you talk to your financial advisors.
You figure out, you know, the rational thing to do.
But consider getting the heck out while you can now.
Because it only takes a very small percentage of asset holders to start selling to turn this whole thing into a cascading, accelerating downfall of fear and panic and blood in the streets and people jumping off buildings and everything else.
It's all coming.
It's all coming.
But no one will believe it until it happens.
And then even after it happens, they'll have selective memories and they'll forget it happened and they don't want to admit it.
No one wants to admit they lost their retirement in the dot-com crash, by the way, even though so many people did.
Even to this day, they don't want to admit it.
It just goes with the territory.
Well, I've said all I can say on this subject, so be well, stay safe, and thank you for listening.
This is Mike Adams, the Health Ranger, for healthrangerreport.com.
Click subscribe to stay plugged in to the Health Ranger Report.
If you'd like to help support this video and other videos like this, visit healthrangerstore.com, where everything we sell is laboratory tested for heavy metals and more.
You'll find superfoods, storable survival foods, nutritional supplements, and a full line of synthetic chemical-free body soaps, shampoos, and oral care products.
▲
Export Selection