Investor Psychology: The Media

As stated in previous articles, there are two main distinctions between investors; the institutions (smart money) and the retailers (dumb money). 

Technically, we are in the class of 'dumb money' as we're retailers. But, the difference is that we think and move like smart money.

One very powerful and influential asset the institutions hold is the media. They are the ones who control what the masses see and ultimately what they believe.

One of my mentors says, "You can only see what you know." Smart money is very familiar with this as they know that you will act in accordance to the information you are fed.

It is imperative we cultivate the skillset of thinking for ourselves. This way we stand a better chance within the psychological warfare of the markets. The media will do all it can to benefit the institutions and ruin the retailers. They may attempt to come across like they have our best interests in mind, but they definitely don't. They know exactly what they are doing.

The media is a form of brainwashing and manipulation. They will not show you how to think but what to think (similar to that of the education system). They will do everything they can to throw you off track and manipulate you into making stupid decisions that will ultimately benefit those already on top.

The media is well aware of human nature & psychology. They understand that if they control what you think, they are also controlling how you act and what you do. With this power they can manipulate you with very little effort.

Fear & Greed

The two key emotions not only in investing, but in life, are fear and greed. Many are pushed to and fro via the power of these emotions and are trapped within their walls.

It is important to understand how these emotions sway us so we can become aware and put a stop to it.

FEAR: mainly comes in two forms; FOMO & doubt.

FOMO: Fear of missing out. This can make investors jump into investments before they should / can result in poor investments leading to a loss of capital. Investors that are scared of missing out on quick gains suffer from FOMO.

Doubt: This form of fear tends to come when we have just made an investment. We can start to doubt its legitimacy or our own ability and can lead us to sell prematurely, sometimes resulting in a loss of capital. It's important we always think for ourselves!

GREED: similar to that of FOMO.

Greed can make us overextend our investing to areas we aren't truly comfortable with. It can lead us to investing more than we can afford to lose which can result in extremely bad scenarios where an investor has lost capital they literally NEED (eg. savings).

Greed can come when asset prices start to rise and can make investors fail to take profits as they feel there is more profits to be made. Failure in taking profits can lead to completely missing out on any profits at all as asset prices are always fluctuating and prices regularly decline, especially after surges in price as corrections are always necessary.

FOMO also has an element of greed to it in which investors will fear they're missing out on more and more profit which stems from greed.

The Media & Market Chess

It is now clear to see how two everyday emotions can have such a critical effect on an investors wins/losses. The media are very aware of this, they create 'news' that mainly acts upon one of these two emotions (sometimes both) in order to create certain ripple effects in the markets.

When prices in the market are increasing, the media will typically show news articles that incite greed. For example, how some random 54 year old woman made $100k on this certain coin or how Elon Musk is supporting DOGE. It's all bullshit, it's all illusions/distractions. Even if the stories are 'true', it's still all illusions. The aim is to spark emotion because that way you're not thinking rationally and will inevitable do something stupid which is usually profitable for the institutions. 

When prices are falling, the media will continue to push out bias 'news'. However, instead of inciting emotions of greed, they will focus on fear. 

This is their process which they simply rinse and repeat throughout all market cycles.

Cut Out The Noise

It is important you understand that 99% of the time the media is feeding you pointless, bullshit information that will have little to no actual effect on your life. In the world of crypto, they will cover 'shitcoins' but not coins with utility that are backed by institutions (because if they did the latter you'd be getting on the side of those that want you to lose).

They need you to lose. For an institutional investor to sell off hundreds of millions / billions worth of an asset, they need millions of retail traders' liquidity (money) to actually be able to sell. The game is literally rigged against you. However, you can learn how they move, move in accordance to them, and profit immensely, which is exactly what we're doing here.

It's up to you how you view the media and how much you take from them. I am simply just making you aware of the truth that they are not with you, but against you and will do all they can to make you lose while pretending to be your best friend. Stay rational, do not let fear take over. Think for yourself, do your own research.

With enough experience in the markets, the media can actually become a signal to you. When they say things you will be able to decipher what they're actually getting at and this will allow you to calculate smart money moves based off this. 

Be patient, your skills and knowledge will be very powerful, just allow the process of time and you will have no worries when it comes to your education and development.

Have a blessed day, everyone.