The Everyman Economist

Just when the Everyman thought that the financial system had learned its lesson, here we go again. The traders are at their old games and the markets are acting like we’re back in the chips. We’ve just come through the worst scenario since the Great Depression and nobody can seriously believe that we’re off to the races, or can they? Well apparently the pundits, the pros and the posers can. In their views, we’re either in a raging bear market or a raging bull market, and nothing in between. Stocks can go from 14,000 to 6,500 and back to 14,000 again…oil can go from $147 to $33 and back to $147 again…and so on and so on and so on. Of course when you can leverage yourself 10, 20, 30 times or more, you can force things your way for a time and that’s where we are once again. The same people that did it to us before are at it again, but this time we have to put a stop to it. The global economy isn’t suddenly growing by leaps and bounds, yet oil is nearly double in price in a few short weeks. If we don’t regulate these guys soon, we’ll be back to $4 a gallon, but this time we won’t have the jobs and income to pay for it. Enough is enough. It’s going to take a number of years to get through these dire times and we don’t need the same old overzealous risk mongers running loose in the markets. It’s time to grab them by their necks and slow them down before they take us all down with them. Where is the regulation we were promised and when will it begin? It better be soon or we’ll have an even steeper price to pay than we’ve paid already. Call your Congressperson, your Senator and anyone else who will listen and demand the regulation the markets need NOW!   

The financial storm has been raging for more than a year and has recently grown into a category 5+ hurricane. It has blown the roof off housing, tossed companies to the wind, and drowned many of our safest investments. But like all storms, this too shall pass and a calm will settle in. The damage will have been done and the recovery efforts will go on for quite some time, but the calm will return. How can I be so sure? Because never in the history of the modern day global financial system have so many resources been unleashed by so many. Trillions are being spent around the world to shore up institutions and national economies and it’s not over yet. That is no small matter and the world WILL see results, albeit slowly, and normalcy will return. The landscape will change and history will look back on these days and call it our great Depression. Not the same as in 1929, to be sure, but a game-changer nonetheless, as we see a transformation of rules, regulations and corporate and Everyman habits. They say “old habits die hard” and we are now living proof.  

One day, sooner or later, Everyman will be buying, selling, trading or investing in a market. There are numerous reasons an Everyman might have for this activity, but there is one secret to all markets that I am going to share with you now. It may sound simple, but it is truly the underlying secret that propels markets. Everymarket is the embodiment of a mass psychology, or simply put, Everymarket reflects what the greatest number of Everymen are thinking during a period of time.

Understanding a market’s psychology is the basis for money-making decisions in that market. For example, oil prices have been on the rise and recently surpassed $100 a barrel. Market psychology has reflected strong demand, lower oil supplies, rising global tensions and so on. This mass psychology has propelled oil to an all-time high and could send it even higher in the days and weeks ahead.  Once we understand the mass psychology behind this market, we need to look ahead at potential changes in the landscape that could impact the current psychology. Are there numbers soon to be released on oil stockpiles and what are the expectations? Are the tensions in specific oil producing countries getting better or worse and will these tensions impact oil shipments? Once we determine the factors that could create a shift in market psychology, we are then positioned to catch a major move in the market. In addition, even if we see stability in the factors that drove oil to this new price level, at some point the existing mass psychology will be “built into the market” and the market will require a “real” catalyst to move it higher. Without that catalyst, the market will fall, perhaps dramatically, with unfullfilled expectations.

From time to time, market psychology will be built on strong fundamental factors that will not be reversed easily. This is especially true of raging bull or bear markets. However, most markets fall into a neutral category and generally stay within price ranges. This is where you get the most out of subtle shifts in mass pychology, as you can buy and sell at various support and resistance levels on a regular basis. So remember, market psychology is Everyman’s first step to the best money-making decisions. 

Many major companies and financial institutions spend big bucks on Economists who advise management, employees and clients on Everyday financial issues. And now it’s your turn! No, not the big bucks part of it, IT’S FREE! I’m the Everyman Economist and I’ll be giving you the insider lowdown in plain English on what makes the financial world go round. Stick with me and you’ll learn about the markets, the economy, investing and all the other good stuff that can put money in your pocket, not the other way around. So turn off your cell phone and forget those goofy TV talking heads. Give the Everyman Economist your time and attention and I’ll show you the money trail.