Blue Chip stocks will crash ?
Just last week, I was browsing through an article out of the Harvard Business Review
on Ernest Dichter's work back in the sixties on crowd motivation. Dr. Evil Dichter is the supposedly
"evil genius" who brought Freudian psychology to Madison Avenue on a silver platter.
He is credited with inventing focus groups and such. He coined "put a tiger in your tank" for Esso.
And when he determined young girls wanted something sexy in the dollhouse he created Barbie for Mattel.
Dichter determined there are four things that motivate a body to tell other folks about something.
He was thinking about brands, but the ideas are really the viral spread of ideas - that is to say, memes.
Here are his four rules:"The first (about 33% of the cases) is because of product-involvement.
The experience is so novel and pleasurable that it must be shared." "The second (about 24%) is self-involvement.
Sharing knowledge or opinions is a way to gain attention, show connoisseurship, feel like a pioneer, have inside
information, seek confirmation of a person's own judgment, or assert superiority." "The third (around 20%) is other-involvement.
The speaker wants to reach out and help to express neighborliness, caring, and friendship.
"The fourth (around 20%) is message-involvement. The message is so humorous or informative that it deserves sharing.
" I'd like to think I write to you because of Reasons #3 and #4, but my wife says it's more likely #2.
Putting Theory to Work
Now let's put our viral skills to a practical use: determining when the markets will tip over into their next deep slump.
We already know many of the memes in play such as "Recession," "Unemployment" and "Inflation," and the upcoming
end of the Fed's free money program - AKA "QE2". In fact, we can quantify the exact effect QE2 had on Blue Chip stocks.
This exercise offers us a pretty clear view of what has been going on over the past year or so, and what is likely to happen over the next year.
The Worst Choice Washington is now faced with a horrid choice: it can cease and desist printing and borrowing.
Without this prop, the markets will, of course, collapse. But there is a chance that this breakdown will be limited in scope.
Or they can (and to be frank, most likely will) cave in to political pressure and commence QE3. This will buy one more upside leg, but will also cause the eventual crash to double in scope. The best hope we can offer you is that we can find a way to monetize these moves via call and put options, regardless of which dark path Washington walks down. However, you will need to be able to buy the calls and puts we recommend. So feel free to check out this free special report on how to score winning option contracts. Why are we giving away valuable info like this? Again, I'd like to think that it's Dichter's third rule.
But, of course, we do have a second motive: We, financial writers, desperately need folks like you to stay profitable in both UP and down cycles. So it is in all our interests that you acquire these critical tools.
Good luck,
Joe Velarde
Managing Director
E-global Solutions. 2011.
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