Blue Elevator Blog

“So do not fear, for I am with you; do not be dismayed, for I am your God. I will strengthen you and help you; I will uphold you with my righteous right hand.” — Isaiah 41:10

A New Fear

It’s March 2020, and there’s a great spirit of fear — even a global fear. It’s the Coronavirus. By any sense, here’s what it looks like at this point:

Now, I’m not saying we shouldn’t take this seriously.  And, by all means, be smart. Be careful. Be diligent. But, please don’t fear.  The panic and hysteria is causing unnecessary alarm.

The Damage of Fear

This great spirit of fear has been allowed to run rampant. People are canceling trips. They are holing up in their homes. Schools are closing. The NBA is suspending basketball games.  This spirit of fear has also compelled people to stockpile toilet paper! This is of great irony, if you ask me. [When you feel out of control, perhaps having a month’s supply of toilet paper will be of great comfort].

And, out of fear, people are even selling off and cashing out of their investments.

This fear needs to be exposed for what it is: fear.

And, sadly, it is self-inflicted. People are allowing fear to dictate their lives. Instead, be encouraged to choose faith: faith in God.

The Fear of Toilet Paper

Does anyone know where the fear of running out of toilet paper started? Lol, I don’t! But, I suspect it could have started by the manufacturers of toilet paper. Lol.

Why toilet paper? There are thousands of household products we’ve all come to rely on. Why not water, paper towels, Kleenex, Q-tips or deodorant?

When you take the basic principles of supply and demand…and mix them with a healthy serving of “fear,” you get an interesting dynamic. Let me explain.

• Someone says, “Better buy toilet paper; There could be a shortage.”
• So, people go out and buy a month’s worth of toilet paper (instead of what they need for the next week).
• And, guess what? When everybody goes out and buys a month’s worth of toilet paper, this actually creates a shortage of toilet paper.
• Classic supply and demand. If demand is 4x normal, this will definitely reduce supply.
• And, this shortage of toilet paper supply has enriched the stores to “mark up” their toilet paper due to the high demand (e.g., I paid $4.99 for 4 rolls yesterday).
• And, it’s all self-inflicted by giving into this spirit of fear.

This is exactly what is happening in our financial markets. I’ll explain.

Don’t Be Fooled Into Fear

There are two groups of people in our financial markets:

• There are the Market Makers (MM). The MM largely operate and control the stock market (the wholesalers).
• And, there is the general public. The consumers. You and me. We are the retail consumers that consume (buy) the stock from the MM.

They are called “Market Makers” for a reason. That is, they make the market. They are wholesalers. This means they buy at wholesale and sell at retail. They buy low and they sell high.

Just some basic Business 101 here: The stock market is controlled by the MM. It operates off of supply and demand…just like toilet paper…and it’s fueled by fear.

The MM operates in conjunction with the media, as they rely on the media to dole out “fear” when they need to use it.

Nothing would be better for the MM (and worse for you) than to accept this spirit of fear that has gone out into the world.

Fear is the tool of choice. It’s used in good times and bad. The MM and media use fear to control and manipulate. And, fear is deployed in two manners of speaking: to manipulate supply and demand.

Method 1 (Demand Side)

Fear is used to manipulate demand using FOMO (an actual acronym). Fear of Missing Out.

• Toilet paper. Better buy toilet paper! There’s going to be a shortage. So, people go out and buy all the toilet paper they can buy. You know what happens when you run out of toilet paper, right? Just think of the alternatives. Fear is used to spike demand, lower the supply and create an increase in prices.
• Stock market. Better go out and buy all the TSLA (Tesla) stock you can. Everyone’s buying it.  It’s hot. Get it while you can. Tesla’s latest 10-Q for the 9 months ended Sep. 30, 2019 showed a net loss of $967,000,000 (e.g., almost $1 billion!). TSLA stock as of the date of this writing has traded from a 52-week low of $176 all the way up to $968. FOMO has served to spike demand, lower supply and create an increase in prices.

But this doesn’t just apply to toilet paper and Tesla stock. This has been used over the decades to wreak havoc on people by manipulating gasoline prices and spurring demand for pet rocks, Cabbage Patch Dolls, Beanie Babies and every bull market since.

Method 2 (Supply Side)

Then, there’s the general use of cold-hearted, unadulterated fear to control the supply side. Let’s go back to the stock market.

Thank God, the stock market has been really great for the past decade. People who have purchased stock, God willing, have done pretty well.

If you recall, I suggested earlier that the MM control and manipulate the markets. And, over the last 10 years or so, the MM have been selling stock to the people at retail prices.

But, there’s a problem. With every share sold, the MM have one less share to sell to the public. In short, demand has been high (e.g., people want Tesla stock), but with as much buying as there has been, the supply is getting low.

God First

Remember, God first. God has blessed the people to see their investment accounts grow. But, now the MM want it back. The earthly mechanisms here play off of supply and demand and are fueled by fear.

• When the people buy stocks, generally, we pay retail prices to the MM.
• And, when the MM buy stocks, generally, they pay wholesale prices and buy at a big discount from the people.
• When the people buy stocks, the people accumulate the inventory of stocks.
• And, when the MM buy stocks, the MM accumulate the inventory of stocks.

The Conundrum

Thank God, as stated earlier, for quite some time, the market has been great. The DOW has reached higher and higher levels. This has been good for the people.

It’s been good for the MM, too. The MM sold these stocks to the people…at the retail prices the MM needed to make a good profit. Seemingly, this was good for everyone.

But, now there’s a problem: the inventory has shifted out of the warehouses of the MM and into the pockets of the people.

And, now the MM want it back. They want your stock back. But, they don’t want to pay you what it’s worth (e.g., retail). Remember, they always buy “on sale” at “wholesale” prices at a “discount,” if you let them.

Presently, it’s my suspicion that the MM supply of stock is getting low. The “inventory” of stocks in their warehouses has gotten dangerously low. You see, a lot of the stock they sold to the people is now held by the people. The people had acquired more and more.

The Method Behind the Madness

Here’s the conundrum. If the MM wants to continue to sell stock to the public, they are going to need to re-fill their warehouses. The only problem is, it’s held by their customers…the people they sold it to.

• Option 1. The MM could go to the people and offer to “buy back” the stock by paying the people more than what they sold it to them for. But, the MM knows they can’t “buy” higher than what they “sold” for. They’d go out of business.
• Option 2. The MM could ask the people if they would be willing to sell their shares back to the MM at a price lower than what the people bought for. But, the people know it would be foolish to “sell” lower than what they “bought” for. Unless…

Seemingly, there is a stalemate. But not for long. The MM will just have to deploy some good old-fashioned fear to wrest these shares away from you and back into their warehouse.

So, the MM uses the media to spread this spirit of fear, so the people will sell them back all the stock they need…and do so at bargain basement prices. Because, once the selling starts, each successive market order is sold below the last.

What Say You?

And, before you know it — but for God and the people’s participation — the MM will refill their warehouses of stock, courtesy of you…at very low wholesale prices.

And, once they fill their warehouses again, they will begin to systematically sell it back to you at retail prices. They’ll also use the “demand side” fear again (e.g., FOMO) to entice you to buy as much as possible. Because, after all, these are great “once-in-a-decade” prices because soon everyone will be paying a lot more for the stock you want.

The media and the MM are capitalizing big time as they are using fear to take back your shares (at your loss) to “refill” their warehouses at discounted prices (for their gain).

And, soon enough, they will happily begin to sell the shares back to you at retail prices…again. You will buy the same shares from the MM at higher prices than what you sold for.

That is, unless you don’t. It’s fine to sell your shares – if you want to.  But, if you do, you might as well sell at a gain — and not back to the MM at a loss.

Be encouraged in the Lord.

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