We may think the internet helps investors, but the numbers differ
I continually get asked about the internet and whether I believe it’s a good thing for humanity. As you probably already know, I don’t place subjective judgment calls on most things; opinions are not really worth anything. The answer is much more complex and to say whether the internet is either good or bad is being overly simplistic.
Ever since the advent of the internet the consolidation of the world’s wealth has accelerated quite substantially.
I can say this much; Ever since the advent of the internet the consolidation of the world’s wealth has accelerated quite substantially. Even the World Bank has said that the internet has been increasing income and wealth inequality. Those who know how to use the internet to their advantage have seen tremendous growth in their personal wealth.
Which means that for the vast majority of humanity, technological innovators such as the internet have actually helped to undermine their level of financial wealth, and I have an idea why. For people who invest and make financial decisions based on subconscious emotion, unrecognized biases, social media influences, or their favorite blogger, the internet has been a net negative. It makes it easy for them to indulge in their bad financial behavior.
This graph was taken from Deutsche Bank’s January 2018 report titled, US Income and Wealth Inequality. To access the full report click here.
The NWO uses the internet to prey on our biases
Unless one can break free from the chains of cognitive bias to a particular philosophy, mindset, or political persuasion, he or she will most likely end up on the investment losing end. This is necessary by definition.
Examples of cognitive bias:
Fundamental attribution error – The tendency for people to over-emphasize personality-based explanations for behaviors observed in others.
Confirmation bias – The tendency to search for or interpret information in a way that confirms one’s preconceptions while discrediting information that does not support their views.
Hindsight bias Sometimes called the “I-knew-it-all-along” effect, is the inclination to see past events as being predictable.
Gambler’s fallacy – The tendency to think that future probabilities are altered by past events, when in reality they are unchanged.
For a more complete list of cognitive biases click here.
Investing is traditionally a lonely pursuit
Contemplating large investment decisions is often a lonely pursuit; if most people in your group agree with you it is time to reassess your investment thesis. Asset cycles will always persist and when one makes financial decisions based on social proof, he or she is acting based on the crowd, and that is usually the losing proposition.
By design, the internet and social media have created nothing more than echo chambers where unwitting investors can indulge in any thought they have at that moment. For instance, if an investor believes there is going to be a collapse, he or she can gain instant access on the internet to the thousands of writers who will indulge in those fears. For those with hard-wired political biases, if people believe President Trump is looking out for the average American they can locate many writings on the web that will satisfy their bias.
Indeed, if a person can discard his or her biases and predilections, he or she can leverage the power of the internet to gain knowledge that would have otherwise been much more difficult to obtain in the past. But this takes discipline and independent thought and the vast majority of humanity not only do not possess these attributes, but do not care to.
Millennials’ use of social media is helping to drive their investment decisions, according to Fabrizio Campelli, Deutsche Bank AG’s global head of wealth management.
They have a “fear of missing out” as they’re more “networked and exposed” through social media to their peers’ activity than previous generations….
FOMO, Social Media Drive How Millennials Invest – AdWeek
A piece of advice to the young folk who read my blog; ditch the social media when making investment choices. If you need the confirmation of your peers you will always lose in the long run. In every asset cycle there needs to be losers and the large majority of market participants will lose. Only a surprisingly few make the profit. Thus, if your friends are all getting involved you can rest assured they are most likely the future losers.
The internet and asset bubbles
Investment bubbles have always been a part of human market history. But If we take a look at how the financial markets have performed since the advent of the internet and its penetration into the general population we can see that there has been a marked increase in the frequency and amplitude of investment bubbles and crashes. Despite all this access to information, investors will never steer clear of manias. They repeatedly make the same mistakes over and over. This is one of the basic concepts of humanity and its rationally irrational financial decision making process. The existence of the internet seems to coincide with the acceleration of the wild asset speculation and the boom/bust cycle we see almost yearly.
Daniel Kahneman, who was the first psychologist to win the Nobel Prize in Economics attributed market manias to investors’ illusion of control, calling the illusion prospect theory. He studied the intellectual underpinnings of investing—how traders estimate odds and calculate risks—to prove how often people act from the mistaken belief they know more than they do. The internet just feeds into this cognitive bias.
One more piece of advice; drop the biases and find those who have been correct over the long-term
This section pertains to those in the alt-financial community who are always predicting the next collapse, but seem to continually lose money and are usually wrong.
Argument from Incredulity: Concluding that because we can’t or refuse to believe something, it must not be true, improbable, or the argument must be flawed. This is a specific form of the argument from ignorance.
Chris: The financial markets can avoid collapse for years, just look at the Japanese bond market. The elites are in firm control of their financial system. The fear is injected to scare people into inaction.
John: The markets have to collapse. These elites are not in control and there is too much debt. How can we pay all this debt off?
Chris: The markets continue to move along decade after decade. Perhaps it’s time reassess your mindset
The internet can be an amazing tool for those looking to uncover the workings of this society and the conspiracy for the global financial dictatorship. Moreover, if one can keep his biases in check when performing investment due diligence, he will find the internet to be an powerful ally. Just look at the high net-worth individuals and see how they use the internet to their advantage. Odds are these people are exploiting social media to their benefit and are able to take risks and think independently.
Most followers of the patriot and alt-media movements are handicapped with a terrible bias. Despite the overwhelming evidence to the contrary, those who are trying to “wake” others up cannot accept that the elites are in control of the monetary system and financial markets. If you are a newcomer to the conspiracy’s underpinnings it is natural to assume this whole thing will fall apart. But to those who are long-standing members of patriot movement you need to realize that things are still being held together, and the fear is mostly injected or self-imposed. Fear keeps people in perpetual poverty.
My one piece of advice for those who are searching the internet to find investment ideas, stay away from those who have been wrong more often than correct. If you can’t then the internet will not help you.