3 stock market lessons from ‘The Twilight Zone’

Commentary: You are about to enter Mr. Market’s dimension

MIAMI (MarketWatch) — His name is Mr. Market.

He is many things to many people — a purveyor of dreams, hopes, and unimaginable wealth. Mr. Market can help you or he can hurt you. When you play with Mr. Market, you risk losing not only your money but your sense of reason and reality.

If you don’t turn back now, you will see a signpost ahead, a warning that you have entered another dimension. For your consideration, the following three lessons come directly from a wondrous place universally known as “The Twilight Zone.”

Mr. Market is not your friend

When you trade stocks, do not think of Mr. Market as a partner. If you do, he may lure you into buying more at exactly the wrong time. Even now, the crowd lines up for the easy money as investors blindly take Mr. Market’s gifts without thinking.

In the Twilight Zone episode “To Serve Man,” Michael Chambers, like other earthlings, welcome nine-foot aliens from outer space who arrive with wonderful gifts, including an end to famine, a nuclear cloaking device, and a new energy source. It’s a golden age, everyone thought.

Soon, thousands of people travel by spaceship to the alien planet, which is described as a paradise. When one of the aliens accidentally leaves behind a book, Chambers, a decoding specialist, assigns one of his employees, Patty, to decipher its contents. Patty and her team translate the title as To Serve Man . Chambers is convinced the aliens come in peace.

A year later, Chambers agrees to visit the alien planet. As Chambers walks up the steps to board the spaceship, Patty runs to him and screams, “Mr. Chambers, don’t get on that ship! The rest of the book, To Serve Man …it’s…it’s a cookbook!” Chambers tries to escape but the aliens stop him, and the ship takes off.

Lesson from the Twilight Zone: By the time you realize that Mr. Market is not your friend (or servant), he will have eaten you for lunch.

Don’t get obsessed with Mr. Market

If you participate in the market, it’s easy to become infatuated by the lure of fast money. On one financial TV show, the flashing lights and party atmosphere resemble a casino. The host tells you there’s always a bull market somewhere, so any stock you pick can be a winner — all you have to do is make the right guess (easier said than done).

If you don’t use the market to gamble, you’ll probably stay out of trouble. But if you take stock losses personally or think Mr. Market is humiliating you, you might get overly emotional and perhaps want revenge. This is a serious mistake.

In the Twilight Zone episode, “The Fever,” Franklin and his wife, Flora, arrive in Las Vegas because Flora wins a contest. Franklin hates gambling and is suspicious of the all-expense paid trip. When Flora puts a silver dollar in the slot machine, Franklin berates her for gambling.

As Franklin leaves the casino, however, a drunken man hands Franklin a silver dollar and insists he play the slot machine. Franklin does, and wins. Franklin is amazed by the free money, and keeps playing. In fact, he plays the same machine all night.

After Franklin loses all his money, he angrily accuses the machine of stealing his last dollar. Franklin has a nervous breakdown and is removed from the casino. That night, in his hotel room, Franklin hears the machine repeatedly calling his name. Franklin is afraid as the slot machine rolls towards him. With his wife screaming for him to stop acting crazy, Franklin cowers against the window and falls to his death. The slot machine, flashing a big smile, rolls beside Franklin, and returns the silver dollar.

Lesson from the Twilight Zone: A word to the wise — if the market calls your name in the middle of the night, you are either obsessed, or in the Twilight Zone.

No one controls Mr. Market

Many people think they can control Mr. Market, but he often acts like a dummy, and even lets you win on occasion. During an uptrend, it’s easy to think you are a genius. Using indicators or charts, you may think that Mr. Market is your personal ATM machine.

On the other hand, when you lose money, it’s a mistake to get angry at Mr. Market. Even worse, don’t try and force him to give you money or you may end up as another Wall Street casualty.

In the Twilight Zone episode, “The Dummy,” ventriloquist Jerry Etherson (Cliff Robertson) suspects that Willy the dummy is alive. At their most recent show, Jerry is upset when Willy interrupts with his own lines. Although the act is a huge hit, Willy acts suspiciously, and even mocks Jerry in a threatening manner.

To gain control, Jerry hides Willy in a trunk and replaces him with another dummy, but Willy escapes. Jerry is so afraid he attempts to kill Willy, but accidentally kills the other dummy instead. In a cruel twist at the end, Jerry loses his mind and is transformed into the dummy, while Willy becomes the ventriloquist.

Lesson from the Twilight Zone: Mr. Market is not as dumb as he seems.

Note: Author and stock analyst Amy Smith from Investor’s Business Daily tells Sincere her stock ideas for this month. Read the interview here.


Michael Sincere is the author of “Understanding Options,” “All About Market Indicators,” and “Understanding Stocks.” His website lists signals from the most useful market indicators.

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