What is Mass Formation Psychosis?
Posted on 01/02/2022
Psychosis is when people lose some contact with reality. Mass formation psychosis is when a large part of a society focuses its attention to a leader(s) or a series of events and their attention focuses on one small point or issue. Followers can be hypnotized and be led anywhere, regardless of data proving otherwise. A key aspect of the phenomena is that the people they identify as the leaders – the one’s that can solve the problem or issue alone – they will follow that leader(s) regardless of any new information or data. Furthermore, anybody who questions the leader’s narrative are attacked and disregarded.
There are four key components needed for an environment to experience a mass formation psychosis: lack of social bonds or decoupling of societal connections, lack of sense-making (things don’t make sense), free-floating anxiety, and free-floating psychological discontent. Free-floating anxiety is a general sense of uneasiness that is not tied to any particular object or specific situation.
When followers start to participate in a strategy to deal with the object of anxiety, new social bonds typically emerge and people change from a highly aversive negative mental state and isolation, to the exact opposite to the extremely high-level of connectedness that exists.
In the context of institutional investors, identifying mass formation psychosis in countries and global markets can be critical to one’s portfolio to identify a trend or major risk that could occur. Some reasons for analyzing this topic include geopolitical risk, policymaker risk, and consumer habits changing.