 Socionomics: Market Psychology Those are familiar with Socionomics will have an idea what the main arguments against any further decline not to speak of an end of the "great rally" from March 2003 will be. Speculative environments come along at most only once in a generation, as a horde of new, inexperienced players is then available to descend upon the stock market scene. Members of the general
public are always latecomers to the market's party, and because of skepticism and rationality
at the door. Today, the public because of its naivete has adopted the same chutzpah as the professionals. Television commentators, newspaper columnists and university professors, who
are nonprofessional members of the public, have been presenting themselves as market advisors. After all, it is easy to say, "buy and hold", why shouldn't they? One of our subscribing money managers who recently adopted a bearish stance on the market heard from a client who called to say, "A short position is so foolish that my 12-year old boy could trade better." That may be a true statement, but when it is a true statement, the market's long-established trend is near a reversal. I label this attitude with the oxymoron "aggressive complacencey," which I feel describes the arrogance and even vehemence with which some people express their disdain for caution.
The public has felt safe in throwing billions of dollars of its discretionary investment capital and pension fund money at stock fund managers under the presumption that professionals know what they are doing and will handle the money correctly. the managers have simply put all the money into stocks, because in the narrow field of stock picking, they may know what they are doing, but in the market analysis field, they do not. In the aggregate, professionals experience is exactly that of the stock market. Fund managers are people too, and in the aggregate they become optimistic at market tops and pessimistic at bottoms. Long time technicians remember the famous Barron's headline of January 1973, "Not a Bear Among Them," which summed up institutional investor's optimism at the onset of the biggest stock market drop in 36 years. Today the situation is repeated. (The Wave Principle of Human Social Behavior, 1999 by Robert R. Prechter)
The Science of History and Social Prediction
The Science of History and Social Prediction spells out a historical correlation between patterned shifts in social mood and their most sensitive register, the stock market. It also presents engaging essays -- representing over 20 years worth of research -- correlating social mood trends to music, sports, corporate culture, peace, war and macroeconomic trends. (The Wave Principle of Human Social Behavior, 1999 by Robert R. Prechter)
More about Socionomics
A Socionomic Manifesto Men have tried for millennia to forecast human events. In the long history of social forecasting, the chronic propensity for immense error has resulted from linear thinking, the extrapolation of current trends into the Future.  This nearly ubiquitous approach is a result of the assumption that laws governing billiard ball behavior apply to human behavior. Simply stated, most people, including economists, are social mechanists. They believe that markets and societies share the property of an object in motion, which will continue along a calculable path until some new outside influence – a force or an obstruction – alters its trajectory. It remains a source of amazement to me how often I am asked what events will cause (or, in modified form, what “catalyst”
will “precipitate”) a change in the direction of the market, politics or the economy, a query which has as its basis the unquestioned assumption that the record of human history is somehow at the mercy of random outside influences, such as earthquakes, volcanoes and floods but with regard
to one presumed social influence over another presumed social effect. Yet social forces cannot be “outside influences” because they reside within the human social experience, in which all elements are interrelated. The general assumption of outside causality nevertheless persists and has as its result the continuing bizarre state of affairs in which most people involved in areas of life where the future is important waste hours debating the various potential “causes” of the trends they hope to predict. They usually conclude that forecasting with any reliability is impossible, yet they persist in the exercise anyway! Successfull anticipation of future events is possible. However, it is possible only with the knowledge that human behavior changes as a result not of external forces but of internal ones. Generally speaking, the human mind has two aspects, which impel two types of actions. Rational, conscious mental processes can induce actions that create airplanes, computers and skyscrapers. Unconscious mental Processes do not produce goods and services but rather generate hard-wired emotional signals that trigger impulsive actions. These emotional signals developed through eons of evolution, which is why they impel all kinds of actions with respect to concerns that are common to lower animals, such as territorialism, fighting, fleeing and sex. (The production of art probably involves both mental aspects, which is why it provides the richest experiences.) One of the unconscious mind’s occupations is increasing the changes of survival through mimicking, which is reflected in the herding impulse, a fact that provides a biological and psychological basis for socionomics. Conventional economists have been mired in the error that trends in finance result from the exercise of the first type of thinking: the rational and the conscious. It is a false premise, which has just begun to be undermined. In twenty years, academic economists have gone from believing that markets are rational, efficient calculators of intrinsic value – and therefore random – to believing that psychology occasionally might have something to do with extremes in short term financial valuation. Someday, a large segment of the profession will surely come to understand that a mix of randomness and psychology is not the answer to overall financial market behavior. At the forefront of the new understanding is the Chairman of Psychiatry at Metro West Medical Center (Boston), Dr. John Schott, who is also an instructor at Harvard and Tufts medical schools and a successful money manager. Even on the subject of practical investing for the individual, he states unequivocally. “Emotions are central, they are the entire ball game.” Emotions are certainly the entire ball game for many individuals, so that as a rare few investors’ individually informed and rational decisions cancel each other out, what remains on the stock market graph is a record of the trends of shared emotion, the mood of the herd. It is not in the social nature of mankind to accept and be content with stasis. If there is one constant regarding social mood, it is its continuous flux. However, the fact that social mood is ever-changing is not, as many would assume, an impediment to forecasting; it is the key to it. Investigations by R.N.Elliott in the 1930s and 1940s yielded the crucial knowledge that social behavior changes not randomly but according to a pattern. Social mood, experiences and conditions vary from time to time and place to place, the patterns of behavior that lead to a reversal
in trend do not. In order successfully to anticipate changes in society reliably, one must understand the consistent pattern of society’s internal dynamics. (Pioneering Studies in Socionomics, 2003 by Robert R.Prechter ,Jr.) Socionomics 2009
The School of Hard Knocks
Stock markets shifted from usual up-down-up rhythm of a bull market back in 1997 to something bigger and more exciting - a straight-up run in prices that is most magnificent of all market animals. It's called a mania.Manias are rare episodes when ever-higher prices create a carnival atmosphere in the financial realm that eventually moves outward to society itself. An extreme, self-reinforcing optimism marks financial manias. This unremitting optimism makes people believe in a new era of uninterrupted economic growth and leads them to demand luxuries of all kinds.By studying past mania experiences, traders can gain valuable insight into the collective emotions that drive their markets. It's possible to make significant money in the advancing stages of a mania with no knowledge of its existence. But there is nothing like recognizing a mania for what it is in real time to help a trader keep those gains and deal the relentlss crash after it peaks. "It never comes gently," Galbraith said, and it "is always accompanied by a desperate and largely unsuccessful effort to get out."
"Most economists still predict continued economic growth for the rest of the year and into 2008."
This article is an excerpt from the Weekly Update of September 1,2007,© ELLIOTT today, September 1, 2007
Stocks Fall Sharply on Credit Concerns
Dow Drops Below 10,000 for First Time Since 2004
Stocks tumbled on Wall Street and around the world and oil fell below $90 on Monday as the banking crisis expanded its grip on the world economy. New York Times, Oct 6, 2008
Dow Drops 400 Points to Below 10000 Amid Global Selloff
WSJ, Oct 6, 2008
Lehman-Drama: Peinlich für die Analysten
Die Probleme der Investmentbank werfen ein unvorteilhaftes Licht auf die Analystenzunft. Die meisten hochbezahlten Experten empfahlen die Aktie des Brokerhauses bis vor kurzem noch zum Kauf. Jetzt rücken sie vom Urteil ab - viel zu spät. FTD, Sept 13,2008
Professional brokerage-house equity-allocation strategists
tend to recommend a heavy weighting in stocks just before
the market falls and a lighter weighting just before the market advances. This is normal behavior, which itself helps to set
the market's highs and lows.
(Conquer The Crash, 2003, Robert R. Prechter)
For the first time in 25 Years, the Dow penetrated its own long term Cycle trendline to the downside!
Think about it.
The main task of an Elliott analyst is to recognize when one pattern is ending, and therefore when the next is beginning. The most basic application of The Wave Principle rests with a recognition of completed forms and an understanding of the current position of the market within whatever pattern is then in progress. From that understanding, the analyst can list probably paths of the market, project to some degree price behavior and device strategy for profiting from the most likely outcomes while protecting against the less likely. With such knowledge and with these skills, the accomplished Elliott Wave analyst can , and does, beat the market.
Elliott Wave International
Chart DJIA
Applying Socionomics to Individual Experiences
in Social Realm
Anticipating tue Peak in a Public Persona from ist Waves
Financial gurus are a social phenomenon like pop stars, which makes their fates somewhat forecastable. Even though one may not have charts of superstars' waves handy, sometimes events are so extreme as to serve as a top signal. However, just because someone receives an award does not mean that this person is peaking, and just because he is the subject of a negative article does not mean that this persona is bottoming. To serve as such a signal, an event must truly be an extreme social assessment of value. I (Robert R.Prechter jr.) have made two forecasts on this basis. In 1992 , Elaine Garzarelli's image was so attractive that she began appearing on television in panty hose commercials.On January 31,1992, I presented the following assessment of her persona: Based on the typical progression, I would conclude that 1992 will witness the peak in her heroic public image, and the media will begin to shift focus toward some of her errors. It is the same natural flow of social psychology that produces bull and bear markets. Within a few months, the press savaged her money management results, and her firm let her go. Chapter 15 discussed the wave positioning of pop music superstars. Michael Jackson enjoyed a long superstardom, which led to an extreme event that signaled the reversal of his persona. Here is my assessment from March 28, 1991: It would be reasonable to assume that the astounding value of the contract that Mr.Jackson signed with Sony on March 19, as noted in the article that follows, is a sign of a peak in his valuation.
"Jackson hits billion-dollar note" ,USA Today, March 21, 1991
Within a year of that event , Jackson's image began slipping. Reviews of his record besame mixed to critical, and his sister ridiculed hin in public. That was wave A down. Then campe a wave B bounce, when Jackson performed for the Super Bowl halftime show in January 1993.By the end of the year, his image was collapsing in a powerful wave C. The list of indignities that year is stunning. He was accused of child molestation. An estranged sibling and fired former employees (paid to appear on tabloid TV shows) were alleging conduct suggestive of guilt. He was hospitalized with a drug problem. He had to cancel the remainder of a world tour. Two major companies terminated their commerical relationships with him. He was Süd for millions by promoters for cutting short his tour. He was sued for millions by two songwriters who claimed he stole their material. A high profile university reneged on giving him a prestigious award. Police ordered pictures of his genitals to verify testimony, and it was rumored that they were being peddled to publications. Certainly his behavior in those months, good or bad, had not changed; it was the public's focus that changed. Moreover, whether Jackson actually committed wrongdoing that warrants the collaps of his image is irrelevant to the dynamic. Unlike most, the following newspaper comments actually stated his situation quite accurately. The self-proclaimed king of pop has enjoyed a lucrative reign, but that kingdom is eroding and in danger of collapse. In rushing to exploit dubious evidence of wrongdoing (Jackson reading Child magazine, for instance) , the media seem oblivous to the concept of presumed innocence. Is this rush to judgement fair? Probably not, but you can't expect restraint when the stakes are so high and the drama so gripping. A loved musical hero of children is a confessed drug addict and suspected child molester. A global icon may retreat from view forever. Guilty or not, Jackson is a tragedy unfolding. If the boy's story builds up, if a jury convicts him, we'll witness a fall from grace as indelible as Richard Nixon's. Both involve admired men empowered by the trust of millions. No Hollywood scandal compares. (The Wave Principle of Human Social Behavior, Robert R.Prechter jr., 1999, p.314)
Garzarelli for Guru It has come to light hat New York Analyst Elaine Garzarelli was blamed by some Clients for causing tue October 16 Crash because she sent out bearish warnings tue previous week. Elaine clearly is bright, she has put in the time and effort to know what she is talking about, and she has the guts to say so. Elaine has my vote for Guru. (The Wave Principle of Human Social Behavior, Robert R.Prechter, 1999, p.320)
Star banker replaces Cayne as Bear Stearns CEO
NEW YORK (Reuters) - Bear Stearns Cos Inc on Tuesday turned to its star investment banker, Alan Schwartz, to replace James Cayne as chief executive and revive the company's badly damaged mortgage franchise. Yahoo.com, Jan 9,2008
Wall Street's Buyout Stars Keep Fleeing
Bear Stearns, Citigroup As the head of J.P. Morgan Chase & Co.'s banking unit that Covers private-equity firms, John Coyle was at the red-hot center of the buyout boom. Now, in tue midst of the bust, he has jumped ship to join a former client, private-equity firm Permira.The 42-year-old banker is not alone. He is joining top bankers from UBS AG, Bear Stearns Cos. and Citigroup Inc. that are taking jobs at private-equity firms. After the several golden years of negotiating multibillion-dollar deals, the bankers face the unpleasant situation of toiling at big investment banks during a downturn.
Goldman Replaces Cohen as Forecaster
Abby Joseph Cohen, one of the most prominent voices of the bull market during the 1990s, has been replaced as Goldman Sachs Group Inc.'s main forecaster of short-term market moves.WSJ, Mar 18,2008
WSJ, Feb 29,2000:
"We may need to boost our expectations for this year... Fundamentals remain quite good. The economy is generating jobs and generating profits, and doing it without inflation."
"I think there will be a serious correction. I don't know when it will start, but it will go down for a while. But I've had that view for a while and tue market keeps on going higher. You come to believe that the traditional historical warning signals just don't worry any more."
WSJ, March 20,2000: Byron R. Wien, chief U.S. investment strategist, Morgan Stanley Dean Witter
The Maestro
Alan Greenspan's Job Just Got a Lot Tougher
WSJ, April 17, 2000
Former Fed chairman Alan Greenspan ohne of the premier magnets of bull market veneration, appears to have a role to play, too. Greenspan's public image at the time of the bullmarket was called "Maestro" and was called 'the real president of the United States.' In February , right at the high, Greenspan was feted as the "2007 American Hero." But after the market fell and he offered negative assessments on the economy and the potential spread of the suprime lending debacle, Greenspan caught flak. "Who Thinks Greenspan Should Pipe Down?" says one representative headline. A March 1 USA Today editiorial ran his picture under one of Mayberry deputy Barney Fife. On Capital Hill, where the usual post-bubble blame game is revving up, Greenspan is a favorite target. Senators and congressman charge Greenspan with a "pattern of neglect" that fostered the unfolding crisis. Instead of riding off into the sunset, Greenspan stayed to bask in the glory of the final highs. Recall that in December 1996 Alan Greenspan's initial observation about irrational excitement on the part of investors produced a sharp market decline. It wasn't until January 2000 that a similar warning fell on deaf ears. When the Dow rallied to a January 14, 2000 high, tue February 2000 EWFF observed the nonchalance and stated that the public's willingness "to completely ignore the sincere concerns of Alan Greenspan, the foremost financial hero of the bull market" signaled that "its potential to experience tragedy is now fully formed." In early December 2006, stocks rallied straight through the 10th anniversary observance of Alan Greenspan's original remarks. A belief in a "more rational" irrational exuberance parallels 2000's lack of concern. The same complacency opens the door to a similar market response.
A Fund Behind Astronomical Losses
The trading strategy of a little-known hedge fund run by an astronomy buff contributed to billions in losses on Wall Street, even as the fund itself profited from the subprime-mortgage crisis.Magnetar Capital, founded in 2005 by a former star trader of Citadel Investment Group, left its mark in another way. Many of the mortgage securities that collapsed in recent months were named for stellar constellations. Magnetar, named for a neutron star with a powerful magnetic field that is a remnant of a supernova, was their common link. WSJ, January 14,2008
Economy in U.S. Probably Contracted Most Since 1982 as Spending Collapsed The worst credit crisis since the Great Depression sent the U.S. economy into a tailspin at the end of 2008 as consumers and businesses retrenched, reports this week may show. Bloomberg, Jan 25,2009
Obama's Rush to Save America's Banks
Is the creation of a huge "aggregator" bank the right approach? Barron's, Jan 25,2009
Obama Plans Fast Action to Tighten Financial Rules
Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers. New York Times, Jan 25,2009
Cashing In On Obama Around the World
Time Magazine, Jan 25,2009
As Sales Plunge, Car Dealers Struggle to Survive
(NEW ORLEANS) — At this year's version of the National Automobile Dealers Association convention, survival has passed maximizing profits as the focus of the annual event.
The Carmakers’ Bleak Year-End Numbers
Auto Sales Plummet, Worsening Crisis
Chrysler Eyes New Global Strategy
So as thousands of dealers from across the U.S. gathered Saturday in New Orleans, they were greeted by workshops entitled "Selling up in a down economy: Taking the bull by the horns" and "Tough times, tougher dealers: Saving your dealership's assets." Time Magazine, Jan 29,2009
Freddie Mac to ask Treasury for billions
in additional funds Barron's , Jan 25, 2009
DAVOS 2009
Economic avalanche The corporate elite will no longer be the stars of the show at the World Economic Forum in Switzerland Barron's , Jan 25, 2009
Economy in free fall in fourth quarter
Worst quarter since early 1980s, and more to come Jan. 25, 2009WASHINGTON (MarketWatch) -- The U.S. economy contracted violently in the fourth quarter, with gross domestic product falling at its fastest pace in more than 25 years, economists said ahead of what promises to be a grim week of economic news. Barron's, Jan 25,2009
John Thain, then and now
WSJ ,23 Jan 2009
Related article:
The Fall of (A) World Hero(s) Article>>>
The Spirit of Davos
The Davos Man is supposed to be gracious and civil.
Not this year.Friday, Jan. 30, 2009.Gazakrieg-Podium
Erdogan sorgt für Rieseneklat
in Davos Beim Weltwirtschaftsgipfel in Davos ist es zu einem Eklat gekommen.
Der türkische Ministerpräsident Erdogan hat den israelischen Präsidenten
Peres massiv angegriffen und anschließend wutentbrannt das Podium zur
Diskussion über den Gazakrieg verlassen. Zuvor schimpfte er:
"Sie töten Menschen." Welt de. , Jan 30,2009DAVOS 2009 Economic avalanche
The corporate elite will no longer be the stars of the show at the World
Economic Forum in Switzerland Barron's , Jan 25, 2009Buried in the economic avalanche Policy makers to hold balance of power in DavosMarketWatch
Jan. 23, 2009Comments: LONDON (MarketWatch) -- A global economic crisis won't be enough to keep CEOs and high-flying financiers away from the helipads in Davos next week, but the corporate elite will no longer be the stars
of the show when the World Economic Forum's yearly retreat for top executives, economists and politicians gets under way high in the Swiss Alps.A crippled financial system and the threat of the deepest global downturn since the Great Depression have changed the equation, participants and observers say. "This is not just another Davos," said Andy Stern, president of the Service Employees International Union, the large and powerful American labor union. A regular foe of private-equity firms and an advocate of tougher
regulation of businesses and markets, Stern will make his first trek to the mountain resort for the annual gathering. Stern said he hopes the current economic turmoil will result in a "humbling and mind-opening moment" for many of the forum's regular attendees. "These experts have failed the citizens of the globe. They have wrought economic havoc with financial manipulation, greed and deregulation," he said, in a telephone interview. "I don't know if it will do any good, but there is a need for straight talk and ending the backslapping, self-congratulatory noblesse-oblige attitude that I think has been more prevalent in the past."
Socionomics explains:
Making History:
An Interview with Film Director
David Edmond Moore
David Edmond Moore of Eyekiss Films in Atlanta recently completed a documentary on socionomics titled History's Hidden Engine, which is freely available for viewing or download at www.socionomics.net/films/history/.
|
[复制链接]
楼主
sunday.jpg)
