Investigations and opinions of psychiatrists who have studied large numbers of psychotics challenge Freud's theory that latent homosexuality is closely related to the paranoid psychoses. Freud's theory is based on his conception of narcissism, which appears to require emendation in accordance with the ego psychology of Federn and Weiss. A modification of Federn's use of the terms 'narcissism' and 'ego libido' is helpful in understanding psychosis and mental health.