Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Five Things: Wake Up, Your Brain Has Been Captured


What is going on here? It's the rush to disassociate.

1) Wake Up, Your Brain Has Been Captured

"The challenge is how do we explain to America what's going on -- how do we break through and help people understand how their brains have been captured?"
- David A. Kessler, former commissioner of the Food and Drug Administration

"How do we break through and help people understand how their brains have been captured?" Indeed. That may be the central question we face today in finance. Only Kessler is asking it about something that is completely unrelated - food production.

The quote is from a piece that recently ran in the Washington Post, "Crave Man: David Kessler Knew That Some Foods Are Hard to Resist; Now He Knows Why." The article is about food craving and former FDA Commissioner David Kessler's quest to unravel the secret behind his own mysterious cravings for food.

"For many, the come-on offered by Lay's Potato Chips -- "Betcha can't eat just one" -- is scientifically accurate. And the food industry manipulates this neurological response, designing foods to induce people to eat more than they should or even want, Kessler found. His theory, born out in a growing body of scientific research, has implications not just for the increasing number of Americans struggling with obesity but for health providers and policymakers."

And so during the process of unraveling this mystery, Kessler stumbled upon our central question: "How do we break through and help people understand how their brains have been captured?"

On the surface it may seem as if this is simply an amusing coincidence; namely, that while a scientist is busy wondering why Americans have allowed their brains to be captured by food industry designers hell-bent on manipulating them for vast snacking and fast food profits, you and I sit here wondering why Americans have allowed their brains to be captured by financial services firms and financial engineers hell-bent on manipulating them for fast finance profits. But these two seemingly disparate lines of questions are deeply related. How? Through social mood.

2) Socionomics

Socionomics is the study of social action that expresses social moods. Most of us believe news events and outside actions cause changes in mood. Socionomics, however, holds that no outside forces change trends and patterns in social mood. Instead, it arises from unconscious herding impulses traced back to evolutionary origins and patterened according to the Elliott Wave principal. In fact, it is these changes in social mood that motivate social action and the interpretation of "news" and events. It is counterintuitive.

This is as applicable to the stock market as it is to consumer behavior, arts and politics.

In an interview with, Robert Prechter of Elliott Wave International, Executive Director of the Socionomics Institute, uses the following chart to summarize and contrast the conventional view of social causality versus the Socionomic hypothesis of social causality.

As Prechter summarizes, "a positive mood induces people to expand businesses, dress with flair, buy happy music, make peace with others and buy stocks. A negative mood induces people to contract businesses, dress conservatively, buy morose music, fight with others and sell stocks. So social mood moves not only the stock market but other measures of social action as well."

These "other measures of social action" being moved can include everything from someone asking why they have allowed their brains to be manipulated by the fast food industry, to art collectors wondering why the piece they just had to have for $50,000 in 2005 seems meaningless to them now, to a nation suddenly concerned about the fact that bottled water (despite having been created in the 1960s) now seems like a ridiculous and frivolous, environmentally unsound, expenditure.

What is going on here? It's the rush to disassociate.

3) The Rush to Disassociate

The one thing we need to keep in mind about a crowd is that, inevitably, there will come a point when people choose to abandon it. This is the "rush to disassociate," a phrase coined by Elias Canetti in his book, "Crowds and Power."

Canetti's book is a fascinating anthropological meditation on crowds, how they operate, and how we are mostly powerless to escape their pull. Interestingly, a key attribute of crowd behavior is the inevitable rush to disassociate from it once it peaks; ironically, that attribute is itself the trigger for yet another herding impulse. As Canetti put it, once crowds peak, a rush to disassociate from the original crowd often fuels their ultimate disruption.

Through the lens of Socionomics we can observe the current rush to disassociate in terms of the dissolution of the crowds that were a consequence of peak positive social mood; crowds that perpetuated everything from the housing mania to the consumption boom, the worship, literally, all things finance, social media web sites and, as shown in today's number one, attitudes toward food.

Is this to say we have no free will? Of course not. It's simply the fact that our brains are still geared toward unconscious herding impulses that we are not aware of, impulses that we often look back and rationalize later, or not, occasionally wondering what in the hell we could have been thinking wearing that polyester shirt and getting our hair permed.

""The challenge is how do we explain to America what's going on -- how do we break through and help people understand how their brains have been captured?" he said."

That is the cornerstone linking all aspects of society. That is why it resonates with everyone; the feeling that we need to wake up, that our brains have been captured. Because they have been captured, but only in the sense that we gave in to herding impulses that made all of these things possible; food engineering, finance, subprime loans, overconsumptiomm reckless spending. Literally everything - from the abuse of credit, the strange notions of real estate, ponzi schemes, central banking, war, sports & steroids, food - is inked to how our brains have been seeking risk and falling for the conviction that we are smarter than our ancestors and know more about things than they did, that we can control risk better, take on more debt and manage it better.

This is the early stages of the kickback, the rush to disassociate, so it will be interesting to see how the revolt - taking back our brains, literally - results in changes. Certainly it is deflationary in the sense that it is a more inward view, with the attendant reduction in social circles, smaller and smaller networks of associations, lower desire for acquiring material goods, reduced appetite for risk.

Of course, it's true we've made many, many advancements as a society. But remember, evolution is a long, long process. And if you want to get a better idea for how long a process it really is, then pull up your shirt, if you're a man, and look at your nipples. Yes, the vestigial nipples.

I think if men would just stop for a moment and consider the fact that we have nipples, ot could go a long way toward helping us modify our behavior and recognizing the reality we perhaps aren't quite as smart and sophisticated as we think; or at the very least, not as independent-minded.

4) Top Three Sellers on Amazon Health?

Speaking of herding behavior, check out the top three best sellers on the

Meanwhile, the Bad News...

The bad news about that is, according to a piece on Bloomberg this morning, "3M Co. and Kimberly-Clark Corp. are among the few manufacturers that make respiratory masks sophisticated enough to ward off swine flu, exacerbating a shortage at retailers."

5) Kentucky Derby

And finally, for those with an interest, here is a link to my 2009 Kentucky Derby Analysis. Good luck.

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos