Investors Are Being “Gaslighted” – Here’s Why

Oxford Dictionaries named “Gaslighting” one of the most popular new words in 2018. The word originated from a 1938 mystery thriller written by British playwright Patrick Hamilton called Gas Light, made into a popular movie in 1944 starring Ingrid Bergman and Charles Boyer. In the film, husband Gregory manipulates his adoring, trusting wife Paula into believing she can no longer trust her own perceptions of reality. Accordingly, gaslighting is the act of undermining another person’s reality by denying facts, the environment around them, or their feelings. Targets of gaslighting are manipulated into turning against their cognition, their emotions, and who they fundamentally are as people.

We are being gaslighted

Investors are being gaslighted by the investment management community (Wall Street) into thinking that:

  • there are no bubbles in stock and bond prices,
  • the Fed is our savior,
  • and securities markets will always go up…

We watch and read, and forget about the current threats because they are not mentioned. Earnings are the focus. Investors buy the future earnings streams of companies, discounting those earnings back to the present in order to get a “fair” price.

  • Because earnings of many companies are currently depressed due to the pandemic, they are expected to surge in the 2021 recovery.
  • Plus, the Fed has promised to keep interest rates near zero for at least three years, so surging earnings are discounted at an incredibly low rate to produce prices that are significantly higher than today’s prices.

It’s all very rosy…but keep in mind, however, that Wall Street gets paid on assets under management – the higher the stock and bond market rises, the more they earn. Wall Street has to gaslight you if they want to maintain their luxurious styles of living. It’s like the research report that says sugar is good for you, sponsored by the Sugar Institute.

…[As I see it, though,]  a severe market correction [is coming] this decade on the order of a 50% or more decline that could stretch over most of the decade…I see a very challenging decade ahead, especially for our 78 million baby boomers, most of whom will be in the Risk Zone for most of the 2020s, transitioning from working life to retirement…They will be the immediate victims, but future generations will pay the ultimate costs. In the meantime, we are being gaslighted into seeing a much rosier future that I hope happens, but I just don’t see it.

Baby boomers should move to safety now. They are invested 60/40 stocks/bonds on average, a high-risk allocation for someone in the Risk Zone…[Instead, they should be invested in]  real assets like precious metals and commodities…[and] substitutes for paper money, like cybercurrencies and gold…

Conclusion

We are being brainwashed – gaslighted – into ignoring current threats – into believing that these threats are not real. As long as markets keep going up, our gaslighted “misperceptions” are confirmed – all is right with the world. Feel had?

Editor’s Note: The above excerpts from the original article  have been edited ([ ]) and abridged (…) for the sake of clarity and brevityAlso note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)
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