Cult Conversion Secrets And What They Can Teach Us


Started in 1954 by Sun Myung Moon and sometimes referred to as a cult, the unification church has expanded throughout the world amassing huge wealth along the way. The church has been accused of using brainwashing techniques and it’s these controversial techniques, specifically related to recruitment, that I wanted to write about today (see the bottom of this blog for a link to a detailed study into unification church recruitment methods).

But We’re Investors, Why Should We Care About Psychological Manipulation?

We need to care because others are trying to manipulate us with these techniques all the time (cults are an extreme example). Understanding psychological manipulation techniques can help us avoid making foolish mistakes in every area of life, not just in investing or business.

According to Charlie Munger (billionaire vice chairman of Berkshire Hathaway), the really extreme results occur when several psychological manipulation techniques are combined.

He Calls This The ‘Lollapalooza’ Effect…

Take Tupperware parties for example. Play money is given to participants for them to spend on giveaway items = reciprocation (technique 1). Participants are encouraged to share how they use products they have already purchased = commitment (technique 2). Guests watch each other buying as the party progresses = social proof (technique 3). You have been invited to the party by someone you know and like thereby making it much harder for you not to transact = liking (technique 4). Combining these techniques in the right way has resulted in many billions of dollars of revenues.

In the famous Milgram experiment, subjects were told by a lab coated supervisor to shock a stranger (played by an actor who was in on the experiment) for every incorrect answer = authority (technique 1). The shocks progressively got stronger = contrast (technique 2). The experimenter gave a false reason why the subject had to continue giving shocks = reason respecting tendency (technique 3). Having already delivered smaller shocks, the participants found it harder to stop commitment and consistency (technique 4). The awesome and shocking result of the study, was that many participants wound up doling out lethal shocks as a consequence of being manipulated by these techniques.

How Do We Relate This Back To Investment? 

Well, I have posted only two examples of many we could think of, showing how the brains of ordinarily smart sane people can be turned into mush if manipulated in the right way. In the investment world when a market is rapidly rising, for example bitcoin, then various forces combine that can lead otherwise sane people to place their hard earned capital at risk of permanent loss:

  • Envy jealousy – a friend or colleague made easy money so why shouldn’t we?
  • Liking tendency – often investments are put forward by perfectly nice likeable people who we have a hard time saying no to.
  • Deprival super reaction – the fear of missing out.
  • Social proof – lots of other people are doing it so we should too.
  • Lure of easy riches – why work long hard hours to get financially independent if an easier way seems possible?
  • Doubt avoidance tendency – the tendency to reach a decision quickly without thinking about it too much. Combines with inconsistency avoidance which is the tendency not to change ones mind once it has been made.
  • Reciprocation – having made a little money due to a rising market,  a feedback loop effect kicks in leading one to keep going.
  • Overoptimism tendency – believing the odds of continued success are much better than they really are.

So the key lesson here is to understand how powerful these techniques are and we are all vulnerable to their effects. To get ahead and avoid being manipulated by others, we must understand the limitations of our mental machinery.

Parmdeep Vadesha

P.S. If you want to learn more about how the Unification Church recruits members read the following study.



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