The feelings I am going to express are less pronounced at the moment as I don’t have a trade on; however, I do remain a proud bear.
I often think the joy I get when the markets dip is not something to be proud of. In the moment, it never dawns on me that each time the markets dip and large sums of “wealth” are destroyed, there are going to be more hungry people battling to make ends meet. The amount of suffering people experience from financial hardship is almost too hard for me to bare and most times I try my best to blank out these images. Having grown up in South Africa with street children begging on the streets with nothing but sad, often petrified eyes looking back it you, I am fully aware of the devastation poverty brings. But one doesn’t have to look far the chances are we have all felt some form of poverty at some stage in our life, so feeling poor is a crap feeling, and celebrating someone else’s misery for our gain doesn’t feel like a good thing to do.
With trading we have so much vested interest in the markets behaving as we would like them to behave. There is of course the $’s invested and the joys of making lots of money when the call pays off, and then of course the anxiety, despair and guilt associated with losing money when the trade goes against you. The intensity of these emotions are not to be ignored, and will be explored in-depth on this site. These emotions represent only the financial profit and losses.
There is a whole other world of ego-conflict taking the form of inflation which comes with sounding like an oracle with superior analytical skills to the masses; and of course the flip side of the same coin deflation – shame and embarrassment when we get it wrong and everyone else gets it right. The ego-defences and projections play a huge role in being right or wrong with our trading calls and further add to our irrational behaviour.
With what I have said as a backdrop I believe the markets were designed to spend most of their time going up with only short bursts of panic resulting in corrections to the uptrend. My thesis is the design of the rise and fall of markets, through our collective psyche, takes the pain of these collective human emotions into account with an asymmetrical correction/pain profile. It seems it wants to give the brave few who suffer against the herd their just deserts in a respectfully humane way. Almost as if to say, “you deserve to make some money for your courage but as many people will suffer and we don’t want the feeling of sadism to take hold we are going to make it quick, to get the pain over for the losers”. This is why corrections are typically short and sharp.
Something to think about when using this line of thinking, is the belief that collective wisdom runs in multiple temporal cycles which explains why we often encounter long (decades) protracted downward cycles like we are in Japan. This occurs to balance the distortion that resulted in a excessively strong prior bull cycles.
To conclude I am not suggesting that every cycle needs to share the exact same characteristics. Rather I think there is an asymmetrical yin and yang in play most of the time. You will probably find that in the rare cases where this symmetry is distorted their will develop a “market complex” which will eventually needs to be integrated into the markets psyche.