Paul’s main interest seems to have been about banking, but the majority of comments I saw, stimulated partly by the title, were about left-right politics.

My own political sentiment aside, one thing I found interesting were the number of times the word “moron” and its unfriendly synonyms were thrown against the opposition (whichever the opposition happened to be), along with assorted accusations on the topics of the immaturity, historical ignorance (often partly true), and lack of patriotism of the other side (again, whichever the other side happened to be).

A surprising number also expressed approval at the idea of Texas seceding, whether the comments were motivated by exasperation, sarcasm, or (on the flip side) hope at escaping the frustrating machinations of the remainder of the American union. And of course many who thought that was ridiculous. The most popular emotional concern seems to have been to blame others or put them in their place. And a small sample feebly requested others to calm down.

The anger behind such an un-moderated, polarized brawl seems to have been expressed by a wide variety of Americans from a wide variety of locations in a surprisingly short period of time. It seems representative of a larger segment of society.

More to my present point, it seems to fit well the theory that mass psychology drives the market, an economic theory associated with such names as Kondratiev, Elliott, and Prechter.

Negative emotion drives bear markets as positive ones drive bull markets. Polarization is also symptomatic of the causes of a bear market. Granting that there is plenty of blame to go around regarding the causes of the bull market collapse, yet I would like to conclude with a question: “What are you and I going to do, not to focus on blame, but to lift yourself and others emotionally and economically?”

Peter Rubel

We may not like your customer’s appearance, political penchant, habits, mannerisms, or whatever, but we don’t need to offer our opinion to his or her face. At home or in the bar room Saturday evening, we let our hair down. And sometimes get embarrassed when we let something slip.

It’s not a new problem; it’s just that social media sites (digg, Facebook, MySpace, Twitter, etc.) have offered a medium to accentuate embarrassing problems. One’s private remarks are publicly available, sometimes to our surprise.

Of course, there are things we should never say anywhere at anytime. Other things are, well, arguably negative, facts being what they are. Murder and stealing are bad ideas in any forum, and it is a good thing to say so, tactfully, even if people get offended by the truth.

But there is something more. The economic theory associated with names like Prechter and Elliot suggests that the herd of humanity moves in substantive measure as an emotional unit and that the herd emotions drive markets bullish or bearish.

Part of that theory suggests that the mood of the herd in a bear market becomes relatively more negative, even antagonistic. If this is correct, social media arenas may become more antagonistic, generating forms of insulation and isolation, for example.

Of course, I am not advocating antagonism, and we all slip up saying or posting negative things we should not. Nor can I change mass psychology single handed.

What I am concerned about is insulation and isolation from honesty and truth. If out of fear or misguided politeness, we deceive others and ourselves, in the end we hurt others and ourselves. Sometimes even in our businesses in the long run. We reap what we sow. As someone said, “Speak the truth in love.”

Peter Rubel

Of course, there are social trends on which one should not capitalize because it would be wrong or unfair. On the brighter side, there were successful and legitimate businesses during the Depression years of the 1930s. My grandfather got a job in pharmaceutical research in 1929 and kept it through the 1930s, World War II, the Korean Conflict and beyond–in other words, the health industry did well, or parts of it did. (At present, the establishment medical industry is often very expensive. Cheaper, effective alternatives may do well.) Shoe and car repair are safe bets in a downturn. Money (or energy bill) saving devices may do alright. Think of home and business security systems and breeding guard dogs. Businesses that can sell alternative income opportunities for cheaper start up costs have a hungry market–work from home, affiliate marketing, network marketing/MLM, paid surveys, etc. Up for a brainstorming session, anyone?

Those who understand the emotions of the times position themselves to provide what the herd wants.

Robert Prechter (Socionomics) made a twin contrarian observation giving profound and substantive explanation for where we are in our economic trends: One, we humans behave emotionally as one moving herd, and two, our herd emotions are the cause rather than the effect of the rising and falling of our markets. Never mind the overstatement and oversimplification (assuming I represent Prechter accurately); consider how the observation helps explain a great deal … and how you may be able to take advantage of it in your business.

Taking a piece related to the observation, you know that people buy what they want rather than what they need. Do you buy foods that are good for you or foods that taste sweet? Does a poor man have a 36 inch HDTV or extra roof insulation to reduce his heating bills? Given a choice between getting a wisdom tooth pulled or buying a name brand purse … in other words, the market is made up of customers and the customer buys, invests or doesn’t based on emotions.

Painting in broad terms, again for simplicity sake, those emotions can be broken into two basic camps. One camp could be comprised of emotion laden terms like excitement, joy, greed, vanity, hope, optimism, goodwill, confidence, bright colors, and openness. The other could be comprised of terms like fear, suspicion, anger, blame shifting, circle the wagons, pessimism, depression, subdued colors, and sarcasm. When enough people in the herd are dominated by emotions in the first camp, we call it a bull market; the other is a bear market. And of course there are big and little movements and trends in the herd.

Peter Rubel