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Wednesday, March 7, 2012

Mindless Animals

One of my favorite historical period-piece films of all time is "The Bounty", a 1984 remake of the famous mutiny of the same ship starring Anthony Hopkins as Captain Bligh and Mel Gibson (when he was more of a charming alcoholic) as Fletcher Christian, who leads the mutineers.

And one of my favorite movie lines of all time comes 2/3rd into the film when Bligh finds some deserters who tried to escape his tyrannical rule by escaping from Tahiti to nearby islands only to find themselves badly wounded by the islanders.  The penalty for desertion was hanging but one of them (Liam Neeson) pleads not to be hung, stating that they came back on their own accord..

Bligh chooses to whip the deserters instead.

But his verbal response is priceless in its bluntness:

"You're a mindless animal"
That phrase always stuck with me, both because the pure directness of the insult, and because it is so true.. there really are many mindless animals who inhabit our society, and not all of them are mentally deficient or commit physical acts of violence.

For those who make their living by investing and trading in the stock market, the term 'mindless animals' is perfectly apt.   So many examples to take from, but let's stick to the past couple days.

For weeks, if not months, they have purposely ignored Greece, much like they've spent 40 months completely ignoring all economic data of the ill health of the US that does not concern corporate balance sheets.  Yesterday, supposedly the investors were nervous and pessimistic about potential default so it dropped over 200 pts...  yay, right?

Today its up over 70pts as of 1:45.

Why?  Ok, here's where the 'mindless animal' part kicks in--  the spike is due to rumors of QE3.

Rumors..  that's all it takes to rally..  Rumors.
~  Mutineers whipped into a lather

Here's how it works:

There's a strange dichotomy in Wall St where every big movement is expressed both overtly and covertly at the same time.   As we wrote last week, the Fed wants QE3 badly and to many traders and other vermin, QE3 is already "baked into the cake" meaning one reason the Dow is so high is eventual expectation of it.   But the government has done such a remarkable job fudging the numbers to give appearance of 'recovery', there's no political cover for QE3 right now.

So what the Fed does is float 'test balloons' out within the markets.  Someone will pick up the phone or send an email to a trusted lackey on a newspaper payroll and give a rumor, to see how the markets respond.  The lackey will run the story and everyone sees the reaction...

Will it spike, drop or act ho-hum to the rumor?  The mom & pop trader have no clue the market is being covertly manipulated but those in the game know- that's the 'overt' part'.  Then the Fed molds its eventual policy to fit the needs of the banks, financials, traders and other evil rot which comprise Wall St.

So based on rumor, the mindless animals push the market up.

Or down...

This is overall how investors and traders think.  They don't.  They react.   They ignore logic and reason so that they are not on the outside looking in during a profit-making bull run.  And they will sell as quickly as the rest of the chattel when there's a market sell-off.

React, then ask questions later.
~ Capt Bligh post-mutiny... adrift at sea

These mindless animals are rather simple people when you get beyond the intentionally complex financial language and convoluted statistical charts, bars & graphs.  Really no different than what you'd see on a nature documentary--  mindless, simple animals going in a certain direction and following whatever movements those few in the lead take.

No individual thought required.

Really all humans are no different.   Most, for all the supposed hard work they display in job and raising family, etc.. people are lazy to the core.  So much easier to believe the leader- to trust the direction he/she is taking and naively believe he/she is looking out for you, then it is to do the due diligence necessary to question and if need be, break away.

Being part of the pack makes us feel safer.  Conforming to the system.. conforming to how others look and act and think.. even conforming to what are acceptable outlets for demonstration and rebellion  (yes, those 'tough' tattoos and body piercings really say something..)
~ Christian watching "The Bounty" burn..  never to see home again

 I guess in a way, we're all conditioned to the belief of safety in numbers I suppose. We do as we're told, think and act as we're supposed to, and raise our kids exactly as we were raised even though we swore at 18yrs old we wouldn't...  we're all mindless animals ultimately

Hmm, actually, as I think on it, No.. There are exceptions aren't there?