Almost everyone has a completely backward understanding of what truly moves markets.
The stock market, for example, is so much more than just a collection of people bidding on prices.
It’s a real-time gauge of how the entire world is feeling at any given moment in time.
If you can wrap your head around this concept, you’re going to be miles ahead of almost everyone else who calls themselves a trader or investor.
This means looking at markets through a completely different lens than what you’re used to.
Why Conventional Wisdom Is Wrong
Most people believe that news events, the economy, and policy decisions are what drive market behavior.
This type of thinking is wrong. And it’s why most traders can’t beat the market.
For example, conventional wisdom tells us if interest rates go up, that’s bad news for the stock market.
But the bull market run from June 1962 to May 1965 is a great example that proves this wrong.
Back then, the market rallied over 76.59% while interest rates went up from 2.68% to 4.10%.
Taking the opposite stance doesn’t work either.
The last time interest rates peaked was in 2007. They didn’t go up meaningfully again until 2022.
One of the greatest bull markets of all time took place during that period. The S&P 500 went up over 620% between 2009 and 2022.
The point is, if you want to consistently beat the market, you need to know one thing: external events like the Federal Reserve setting interest rates, inflation reports, unemployment claims, even earnings… just don’t matter. Not one bit.
How to Use Social Mood to Determine Market Trends
When it comes to the stock market, only one thing matters: how people feel.
If that seems like wishy-washy voodoo, you’re certainly not alone.
And if there wasn’t a way to measure those feelings using science and mathematics, I’d agree with you too.
But fortunately for us, there is. And it’s what helped me quit my high-paying job at Apple and go on to trade billions’ worth of currency, making millions for myself and my former clients.
As I mentioned earlier, the stock market is a real-time gauge of social mood. It provides specific and detailed numerical data to measure changes in mood.
In other words, there’s a clear record of prices going up and down.
There are two simple conclusions we can come to by using this price information. First, when the stock market is going up, social mood will trend positively. Second, when the stock market is selling off, social mood will trend negatively.
This information can be used not only for forecasting the future direction of the stock market, but also to predict what kind of music will top the charts, which movies are likely to be box office hits, and what fashion trends are on their way in or out of popular culture.
The Difference Between Bull and Bear Markets
For example, you may have heard of the relationship between hemlines and stock prices.
Shorter hemlines became popular in the 1920s. The stock market at the time was also in a roaring bull market. The S&P 500 gained almost 400% in just eight years.
When the market finally topped in 1929, preceding the Great Depression, a shorter hemline fell out of fashion.
If you Google image search skirts during the 1930s, you’ll see that almost all women were wearing longer hemlines than they were just a few years before.
Price action analysis of the stock market can explain many other trends as well.
For example, bright colors are generally favored during bull markets. On the other hand, bear markets bring more muted tones into fashion.
Imagine the advantage a designer or fashion house would have over their competition if they were aware of these relationships.
The exact same analysis applies to the music and film industries. Generally speaking, bull markets popularize high-energy, feel-good music, as well as lighthearted movies.
Bear markets often usher in horror movies and melancholy music.
A great example is the original Texas Chain Saw Massacre. The release date for this iconic horror movie was October 1974.
The timing was perfect. A bear market began unfolding in January 1973. By riding this wave of negatively trending social mood, the film ended up a box office smash hit.
If you’re not convinced on the impact of social mood, think about your own situation.
Does your mood impact what you buy and when… or what clothes you’ll wear on any given day… or the kind of book or movie you feel like reading or watching?
Now, if that happens at an individual level, multiply that effect across millions of people and billions of dollars. Trends that large can be easy to track, and in turn, profit from.
The applications of social mood analysis are varied. If you’re working with a film studio, then you could offer insights as to what kinds of movies would do best given what ground the stock market has recently covered.
So, why am I telling you about this now? Let me explain…
How to Profit From the Current Trends
A lot of people are unprepared for the financial storm that’s about to rip through the markets. If most people were always on guard against a crisis, then the crisis probably wouldn’t happen.
A precondition for a crisis to occur is large-scale complacency against risks.
That’s why when bitcoin is ripping higher, or the stock market is melting up, very few people are ringing alarm bells. They’re too busy counting their money to be worried about losing it all.
And right now, complacency appears quite high.
Since putting in a bottom in October 2022, the S&P 500 has risen as much as nearly 32%. Investors are hoping that we can soon break to new all-time-highs.
Good traders know that hope, unfortunately, is not a strategy. That’s why I’m ringing the alarm bell. Even if the market does fully recover, it won’t be enough to avert the coming crisis.
It really comes down to one big trend…
The entire U.S. economy has been propped up on fake and borrowed money.
Twenty years ago, U.S. gross domestic product (GDP) was about $11.4 trillion. In 2023, it’s over $23 trillion.
On the surface, that sounds great. But 20 years ago, the U.S. debt-to-GDP ratio was only 59%. In other words, America owed its borrowers 59 cents on every dollar produced by the economy.
Today, the debt-to-GDP ratio is close to 120%. That means America owes more money than it can make.
Imagine you’re in a situation where every month you have to borrow money to make ends meet. That’s not a good situation to be in.
More importantly, it’s not sustainable. Eventually, people will stop lending you money because they don’t think you can pay them back.
You might think that’s not a concern for America. After all, the U.S. is the world’s leading superpower.
But two major ratings agencies, Fitch and Standard & Poor’s, have recently downgraded America’s credit rating from a perfect AAA to AA+.
Now, that doesn’t change how you’ll go about your day-to-day routine. At least not yet.
But it is a crack in the fortress that has been the American economy. And it could be the very early signs of a massive shift in social mood.
Keep in mind, my intent is not to scare anybody into doing anything rash.
There’s still time to take steps to protect your wealth while strategically being positioned to take advantage of what’s about to happen next.
But that time is quickly running out…
That’s why I’ve been working in secret over the last several weeks with a small group of traders on what I call “Project X.”
I’ve taught these traders everything I know about spotting trends to help them profit like the pros. So far, my strategy has returned a 79% win rate over the past 12 months.
And I just shared all the details – including how you can get involved – in a special online event. You can watch a replay right here.
This unique system can help anyone – even novice traders – make more money, more easily, and with greater certainty (and speed) than anything else you’ve ever seen or heard before…
Analyst, Market Minute