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High-Flying Technological Forecasts Are on a Collision Course With Reality
2019, Article, Chuck Thompson, Excerpt, Socionomic Theory, The Socionomist
By Alan Hall | Excerpted from the January 2019 Socionomist
[Article] Social Mood Regulates the Popularity of Stars. Case in Point: The Beatles
2010, Article, Cultural Trends, Excerpt, Robert Prechter, The Socionomist
By Robert Prechter | Excerpted from the July 2010 Socionomist
In The Complete Beatles Chronicle, English author and historian Mark Lewisohn said this about Beatlemania: “Why the mayhem started,
and why it was necessary to those causing it, will forever remain a mystery, defying social psychologists and historians then as now”.
Psychologists, sociologists, and historians may not shed much light on the coming and going of mass adoration of performers and groups like the Beatles.
But a socionomist can.
In one of our most-read articles, Elliott Wave International and Socionomics Institute founder Robert Prechter uses the Beatles as a case study of how social mood
drives the popularity (and unpopularity) of public figures.
The following excerpt from the July 2010 article presents some of Prechter’s insights.
Waves of Social Mood and How They Impacted the Beatles’ Success (see Figure 1)
A brief history of the Beatles as it relates to our best sociometer - the stock market—should help elucidate the case for the socionomic regulation of the popularity of famous people.
The main general point of this review is to show that the radical shifts in the Beatles’ fortunes followed quite precisely the radical shifts in the stock market’s fortunes. Contrast the years
of struggle and frustration, ending at the bottom of the bear market of 1962, with their career-making breakout when the trend turned up. Contrast the spectacular rise in their fortunes
as the stock market rose from 1963 through 1965 with the string of stunning setbacks during the bear market of 1966. Observe that the rally of 1967-1968 brought a return to success,
but, being a bear market rally, not a bull market wave as was 1963-1965, it had plenty of stresses and negative aspects. Finally, contrast the events attending the 1967-1968 stock
market rise with those of the 1969-1970 bear market. The changes in their experiences are so stark—and the role of society so obviously important—that one cannot fail to see the
trends of social mood at work. Figure 1 summarizes this information. For those interested in getting a more intimate flavor for each of these periods, as well as for those interested in the
story itself, a detailed timeline follows.
… The Early Playing Years: 1957-1962
Everything the young members of the Beatles did with respect to the band’s career beginning in 1957 but especially from the summer of 1959 forward laid the groundwork that allowed
them to benefit from the watershed event that came in October 1962, namely, the change in social mood from negative to positive at Primary degree.
Perusing the events of this initial five-year period gives one a feel for the shortcomings, roadblocks, difficulties, vacillations and failures that dogged the band’s efforts through the end of the
Primary wave 4 correction in the stock market. In the formative years through 1960, the band members were usually so broke that they would argue over whether to pay extra for jam
on their toast. They could rarely afford to buy records, so even as late as 1961 they were copping chords and lyrics of songs in the listening booth at NEMS record store.
This period breaks into three sections: one year of initial activity (1957-58), one year of inaction (1958-59) and three years of concerted effort (1959-62) against the headwind of a bear
market. Figure 2 includes the first two periods; Figure 3 depicts the third.
Initial Activity/Inaction, 1957-1959 (2 years) (see Figure 2)
February 1957: John and Pete Shotton are suspended from school. They spend two weeks of daytimes hiding out at Julia’s house, playing and learning banjo, skiffle and rock ’n’ roll songs.
Circa March 1957: John’s Aunt Mimi buys him an acoustic guitar; he takes a couple of lessons.
Early March 1957: John’s friend George Lee suggests starting a skiffle band. John and he assemble some friends, including Pete. Originally dubbed the Blackjacks, they change their name
to the Quarry Men.
April 1957: The Quarry Men begin performing at private parties with John Lennon (then aged 16) singing lead. For the band’s entire three-year life, it plays with either no drummer or a
temporary one. …
In the rest of this 38-page article, Robert Prechter uses five more figures to illustrate how social mood regulated the Beatles’ popularity throughout the rest of their career, including Beatlemania
from 1962 to 1966, low production and controversy in early 1966, a new band persona from late 1966 to late 1968, and the group’s internal conflicts and ultimate dissolution from late 1968 to
1970. Prechter also reviews events in the aftermath of the band’s breakup, such as a resurgence in the Beatles’ productivity and popularity during the stock market rallies of the 1990s and 2000s.
*Bonus: Learn how the numbers associated with the Beatles’ career illustrate a Fibonacci influence. Also, discover how the career ups and downs of bear-market hero John Denver contrasted
with those of the Beatles.
Can Stock Values Simply
And it's happened before, too -- just think back to the 2007-2009 financial crisis
By Elliott Wave International
On Wednesday (Jan. 13) CNBC reported that,
"Almost $3.2 trillion has been wiped off the value of stocks around the world since the start of 2016, according to calculations by a top market analyst.
U.S. stocks are now off $1.77 trillion, while overseas stocks are down $1.4 trillion."
Stocks rallied on Thursday -- but then tanked even harder on Friday, which probably made that $3.2 trillion figure even bigger.
But how can that be? Doesn't money simply move from one asset class to another?
Our readers have asked us this question before -- especially during the 2007-2009 financial crisis, when 54% of the Dow's value got erased in just 18 months.
You may be wondering this, too. Well, here's an answer -- from Ch. 9 of Bob Prechter's New York Times Business bestseller, Conquer the Crash:
Financial Values Can Disappear
(Excerpt, Conquer the Crash, ch. 9)
People seem to take for granted that financial values can be created endlessly seemingly out of nowhere and pile up to the moon. Turn the direction around and
mention that financial values
can disappear into nowhere, and they insist that it is not possible. "The money has to go somewhere ... It just moves from stocks to
bonds to money funds ... It never goes away ... For every buyer, there is a seller, so the money just changes hands."
That is true of the money, just as it was all the way up, but it's not true of the values, which changed all the way up.
Asset prices rise not because of "buying" per se, because indeed for every buyer, there is a seller. They rise because those transacting agree that their prices
should be higher. All that everyone
else -- including those who own some of that asset and those who do not -- need do is nothing.
Conversely, for prices of assets to fall, it takes only one seller and one buyer who agree that the former value of an asset was too high. If no other bids are competing
with that buyer's, then the value of the asset falls, and it falls for everyone who owns it. Financial values can disappear through a decrease in prices for any type of
investment asset, including bonds, stocks and land.
Anyone who watches the stock or commodity markets closely has seen this phenomenon on a small scale many times.
Whenever a market "gaps" up or down on an opening, it simply registers
a new value on the first trade, which can be conducted by as few as two people. It did not take
everyone's action to make it happen, just most people's inaction on the other side.
The dynamics of value expansion and contraction explain why a bear market can bankrupt millions of people. At the peak of a credit expansion or a bull market, assets
have been valued upward, and all participants are wealthy -- both the people who sold the assets and the people who hold the assets. The latter group is far larger than
the former, because the total supply of money has been relatively stable while the total value of financial assets has ballooned. When the market turns down, the dynamic
goes into reverse. Only a very few owners of a collapsing
financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent
or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses
to someone else. In a bear market, the vast, vast majority does
nothing and gets stuck holding assets with low or non-existent valuations. The "million dollars" that a wealthy investor might have thought he
in his bond portfolio or at
a stock's peak value can quite rapidly become $50,000 or $5000 or $50. The rest of it just disappears.
You see, he never really had a million dollars; all he had was IOUs or stock certificates. The idea that it had a certain financial value was in his head and the heads of others
who agreed. When the point of agreement changed, so did the value. Poof! Gone in a flash of aggregated
So, the answer comes down to "money" vs. "value."
Financial values don't move from one asset to another. They can just disappear.
[ Source: Elliottwave International]
In “A Survey of US Secessionism” (The Socionomist, February 2010)
Alan Hall noted that secession springs from the desire to “polarize and separate,” which is a manifestation of negative social mood. Since January 2000, social mood as reflected
in theinflation-adjusted Dow Jones Industrial Average has been trending negatively at large
degree. And in Europe, waxing negative mood is evident in the declining Euro Stoxx 50 index.
In conjunction with these trends,secession movements are under way in 10 US statesand four European countries.
Secessionist sentiment is not a new phenomenon. In the July 1994 issue of The Elliott Wave Theorist Robert Prechter observed that secessionism had already become a reality of US
regional politics and that it also posed a threat to Canada. The following year, voters in the Canadian province of Quebec narrowly defeated an independence referendum 50.58% to
49.42%. Mood in the US was trending positively at the time, leading to peace and political
But in his book, At the Crest of the Tidal Wave (1995), Prechter said that when mood became sufficiently negative, the result would be “polarization between and among various
perceived groups, whether political, ideological, religious, geographical, racial or economic.” He added, Political manifestations will include protectionism in trade matters, a polarized and
vocal electorate, separatist movements, xenophobia, citizen-government clashes, the dissolution of old alliances and parties, and the emergence of radical new ones. In the August 2001
Theorist, a year following the downturn in the inflation-adjusted Dow, Prechter said he “wouldn’t be surprised to see California subdivide” and see Canada “end up as two, possibly three
countries.” And two years ago he said it is “highly likely that a secession movement will sweep through numerous states over the next ten years” (November 2012 Theorist ). Prechter also
foresaw the current separatism within the European Union. In The Wave Principle of Human Social Behavior (1999), he pointed to a multitud of peace initiatives and olive branches impelled
by the large-degree positive extreme in social mood and predicted that this trend would not last forever: In the late 1990s, we are approaching the top of wave (V), which will also mark a
Grand Supercycle degree top, the largest in over 2½ centuries. ...[A] European union was consummated follow ing 1500 years of repeated conflict in the region. ... This multi-year pageant
of apology, concession and agreement and the concurrent wonderful atmosphere of international peace and cooperation are consistent with my Elliott wave case that an uptrend of Grand
Supercycle degree is ending.
Let’s take a look at secession, first in the US and then in Europe and beyond, to better understand the growing desire for separatism. The Quest for a 51 st State Figure 1 shows the trends
of real US stock prices from 1950. In conjunction with the latest down trend, 11 Colorado counties held referendums in November on a proposal to create a new state called Northern
Colorado. Five of the 11 counties approved the measure. If they decide to proceed with secession, they will need the approval of Colorado voters as well as Congress. Regarding the
Colorado vote, Bloomberg Businessweek said, ... the polarized red state-blue state mindset that has dominated American political discourse for the past few decades has now dissolved
further into red county-blue county.
And instead of cooperating, groups that find themselves in the minority have decided to go live by themselves. 1 In northern California, Glenn, Siskiyou and Modoc counties also want to
secede from their state. They are part of the State of Jefferson movement, which seeks to convince counties in northern California and southern Oregon to form a new state called Jefferson.
People in this area actually appointed their own governor in 1941, in the depths of a bear market. But their efforts to secede ended when Japan bombed Pearl Harbor and the US unified
against a common enemy. 2 In December, technology investor Tim Draper unveiled his plan not only to create a state of Jefferson but to divide California further—into six states (see Figure 2).
His Six Californias movement has a website and is seeking volunteers.
3Secession Fever Sweeps Europe European unification waxes and wanes with social mood as reflected in stock prices. Brian Whitmer demonstrated this in his article, “The Developing
European Tinderbox” (The Socionomist , December 2009).
Currently, the Euro Stoxx 50 Index (Figure 3) has been in a bear market since 2007. In conjunction with this trend, Scotland, Italy, Belgium and Catalonia are displaying manifestations
of separatism.[ Source: Elliottwave International]
Don't Get Ruined by These 10 Popular Investment Myths (Conclusion)
Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. --
NONE have a reliable effect on the stock market
By Vadim Pokhlebkin
Wed, 26 Nov 2014 15:30:00 ET
You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail? And more importantly,
will they warn us of a new approaching doomsday, should there be one?
This series gives you a well-researched answer. Here is the conclusion of this 10-part series.
(And if you missed the previous installments of this series, you'll find them here.)
Conclusion of the "10 Popular Investment Myths" Study
By Robert Prechter (excerpted from The Elliott Wave Theorist; published monthly since 1979)
We have investigated [see Parts I-X of this 10-part series -- Ed.] whether one can find any consistent cause of financial market price changes by looking
at dramatic events and trying to tie them to market movements.
What if one reverses the investigation to look for dramatic price changes first and then try to fit them to causal events? In their 1989 paper, Cutler, Poterba
and Summers investigated just such situations. Starting with days during which stock prices moved dramatically, they scoured the news to find exogenous
Their conclusion is stunning:
“…many of the largest market movements in recent years have occurred on days when there were no major news events.”
In other words, whenever the stock market was leaping or plummeting on any particular day, there was often no news sufficiently striking to explain it.
And it happened regardless of the fact that there is lots of news all the time, providing substantial opportunity for data fitting, which is what financial reporters
do at the end of every trading day and what many economists do in their monthly reports.
Perhaps you are thinking that important background conditions are trumping daily events. Surely the two most dramatic price changes of the past century have
clear causes. Or do they?
Economists of all stripes have tried to come up with an explanation for the 1987 crash. Yet in a 1991 paper, four years after the fact, William Brock studied
economists’ commentaries and concluded,
“In my opinion, no satisfactory explanation has been found [for] the most recent crash…Black Monday, October 19, 1987.”
What about the most devastating event of the 20th century, the Great Depression and the collapse in stock prices that led to it? The Winter 1999 issue of the
Federal Reserve Bank of Minneapolis’ Quarterly Review observed,
“Economists and policymakers are still studying and debating what caused this catastrophic economic event.” ...
Economists have had eight decades to extract something of value out of their exogenous-cause model, only to find that it offers no useful answers and no explanation
upon which its proponents can agree. Remember, we are not even asking economists of the time to have predicted the event.
As history reveals, the opposite occurred; the most famous economists assured the public that nothing of the kind was on the horizon, that the economy had reached
“a permanent plateau.” Considering that we seek only a retrospective explanation from this report, a more damning indictment of the exogenous-cause paradigm could
hardly be imagined.
When you are brilliant, your mind is rational, your logic is sound, and yet your conclusions are continually wrong or inadequate, there is only one explanation:
Your premise is false.
We have shown that the phrases “interest-rate shock,” “oil-price shock,” “trade-balance shock,” “earnings shock,” “GDP shock,” “war shock,” “peace shock,”
“terrorism shock,” “inflation shock” (and therefore “deflation shock”), “monetary shock” and “fiscal shock” have no value (and in my view not even any meaning)
when it comes to analyzing the behavior of financial markets. There must be something wrong with the premise behind these terms.
To summarize our findings up to this point:
1) No type of exogenous event leads to a consistent result in financial market movement.
2) The biggest stock market movements have no clear exogenous causes even in retrospect.
3) There are no consistent correlations or relationships between supposed exogenous causes and market results.
Why the Failure of Exogenous Causality Is Not Often Apparent to Most Observers
Most of the time, the stock market rises and the economy expands. During such times, economists confidently cite half a hundred various exogenous causes to explain
the growth that is occurring. Even though the explanations are either tautological (“the increase in jobs has fueled a pickup in GDP”) or bogus (and refutable in every case
by showing a single historical graph), no discernible cognitive dissonance occurs among economic theoreticians or practicing economists and their clients. All these people
feel comfortable, so they accept the adequacy of the explanations and demand no evidence.
But when people are uncomfortable, they begin to seek valid explanations, which do require some evidence. People are uncomfortable during bear markets and economic
contractions, so this is when they actually bother to investigate economists’ theories, methods and explanations. At such times, the theories, methods and explanations are
always found wanting. They are just as wanting when times are good, but during such times no one bothers to check.
[ Source: The Elliott Wave Principle,1990 Frost & Prechter
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