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2017, Economic collapse, economic meltdown, economics, financial collapse, investment risk, risk, stock market collapse

Investor Psychology and Sudden Economic Collapse

“If you’ve ever read any of Nassim Nicholas Taleb’s work (which should be a requisite for anyone in business) you’ll know one of his often used analogies to explain the psychology of many prior to a Black Swan event is the turkey, and its view of the world up and until Thanksgiving.

A brief description goes something like this: All the time prior the turkey believes life is grand and will continue forever, and the farmer has nothing but his best interest at heart, caring for him with plenty of food, water, and shelter. To convince him otherwise is a fools-errand. Then – Thursday happens.”


This is not so different from the “irrational exuberance” Alan Greenspan once spoke of or the way almost everyone with two extra nickels was investing in the stock market just before October 1929’s epic crash.  The turkey liked feed corn and didn’t ask questions.  Investors today like when profits occur with minimal research effort.  Do most investors understand how precarious today’s status quo really is?  Is the risk really understood?  Do you suffer from “normalcy bias” – extrapolating stability you have known forever into the future, instead of understanding that the longer things have stayed one way (stable progress) the MORE overdue we are for a change and the MORE likely collapse becomes compared to never-ending good times?

And when the next major crash inevitably begins, will you be ready to acknowledge it for what it is – or will your greed blind you into denial?

As a recent Vanguard Study suggests: after the first stage of deciding to invest, in stage two “an investor grows over-confident about his investment decision. He also thinks too much about recent positive results, failing to take long-term information into account.”  In stage three “these market participants suffer from two conditions. The first is group-think, whereby they begin to feel invulnerable and rationalise their behaviour and also to ignore contradictory information. The second problem is that groups tend to make riskier decisions than individuals make on their own…. The final act represents the come-uppance phase. Here, investors become realists as the worth of their investments tumbles. “At some point, observed data becomes so overwhelming as to call into question the excessively optimistic forecasts of market participants,” according to Vanguard’s research.

Guess what, investors: we are well into that stage.

If economic collapse does come soon – are you prepared?  Are you financially diversified?  Are you a prepper?  Are you mentally or spiritually ready for very hard times?

You know what I expect from my articles and my books.  What do you see in 2017?


About David Montaigne

Historian, investigator, and author of prophecy books like End Times and 2019, and Antichrist 2016-2019


2 thoughts on “Investor Psychology and Sudden Economic Collapse

  1. The United States of America has racked up a deficit of US$ 20 trillion counting. This will with Trump spending will ratchet up to US$ 22 trillion by January 2019. Gerald Celente an authority on trends has forecast that US will experience hyperinflation, food riots and the selling of the dollar will exacerbate and lead to 90% depreciation of the US dollar. I had previously informed that there are three bull markets in equities from 2003 to 2008 which lead to the subprime crisis in 2008. Similarly the price of commodities will go up and Gold will rise 3-4 times from the present level of US$ 1600 in 2019. The US will have a collapse similar to the USSR collapse in 1990 that was followed by a 12 Year bear market from 1992 to 2003. Similarly there is a 12 Year bear market from 2019 to 2031 and a further 12 year bear market in 2037 to 2049.
    This collapse is unavoidable and Mr. Trump is shoring up his business interests instead of putting a freeze on US borrowing.The Us cannot pay the interest cost on it’s borrowing. The bibilical crash will cause the US per capita income to fall to US$ 6,000 in 2019 to 2031 from US$ 60,000 in 2019. More people in the US will become paupers.

    Posted by Ravi Shankar | November 29, 2016, 1:51 pm
    • As a generalization, I agree economic collapse is likely, but you have very specific details in your post… to predict a bear market from 2037 to 2049 – well it seems unlikely that financial trends now could clearly indicate anything so far ahead.

      Posted by David Montaigne | November 30, 2016, 10:33 am

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