PSE: Paranoid Schizophrenia Environment

‘schizophrenia is a serious mental disorder in your mind that doesn’t agree with reality. This can result in some combination of hallucinations and delusions. Paranoid schizophrenia was once a subtype of this condition because paranoia commonly happens with schizophrenia where a person feels distrustful and suspicious.”

Mental illness is not a condition to be taken lightly. Many decades ago, a close family member suffered from Schizophrenia and was hospitalized for treatment. It is a life-long condition without a cure that occurs due to a combination of genetic and environmental factors.

Nonetheless, the symptoms simplified can help us to understand parallels because they can be manifested not only in individuals but also in institutions and societies in general. In this case, the simile to stock market trading and price movement is instructive.

Those who were born after September 2, 1945—the end of World

War Two—and died before the first Covid lockdown in Italy on March 9, 2020 never experienced a global mass experience event. There have not been many of those that affected all aspects of human existence—political, social, and economic.

The world, and each one of us, has gone through a major trauma. Posttraumatic stress disorder (PTSD) is a mental health condition triggered by a terrifying, potentially lifethreatening event that we perceive as possibly happening again. Severely stressful life events and trauma may trigger schizophrenia.

The point is that our collective mental health, regardless of what you

These hallucinations are like Covid—endemic and contagious. Wolf Richter describes it this way: “It’s when everyone is, energetically hyping everything, willfully swallowing any propaganda or falsehood, and not just nibbling on it, and strenuously avoiding exposure to any fundamental reality. For only one reason: to make more money.”

might call it, has been stretched and no better example of that is to be found than with the investment markets.

What are the two most prevalent symptoms of Paranoid Schizophrenia? Delusions and hallucinations. Delusions are false beliefs despite evidence. A hallucination includes seeing, hearing, even smelling something that isn’t there. Welcome to the financial and asset markets of 2022, not that the markets haven’t always been crazy, but now it’s worse

Let’s confine ourselves to the local stock market as it is complicated enough for our traumatized thinking. Delusions—false beliefs—are always easy to find on the PSE. There are several delusions regarding what factors correlate with PSE price movement. Initially we want to see a correlation to inflation and economic growth. Confining the analysis to 2018 forward, although a much longer period still applies, the PSE and growth did not move together until the collapse of both in 2020. Understandable. Even in 2021, the economy was “booming”—not only because it’s coming from a low base—but the PSE was anemic. The PSE dropped in the first and second quarters of 2021.

Inflation declined substantially from the middle of 2018 until precovid 2020, and yet the PSE went nowhere. A solid correlation is now as inflation boomed and the PSE is down about 7 percent. On both factors of growth and inf lation, correlation seems to occur during extreme movements and even then, it is not predictable. Thinking otherwise is a delusion.

However, there is a strong correlation going back 25 years between the USD/PHP exchange rate and the PSE. The market responds more strongly to the peso movement with a higher than 1.0 beta, a measure of the volatility of a “security” compared to another.

Hallucinations are like delusions except that hallucinations require more than a simple belief to actually “see” something that does not