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HollandPark

Social Mood : The Key To The Economy ?

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A VERY interesting documentary abour Crowd Behaviour,

and a science that examines it

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DOES SOCIAL MOOD create the Economic Evironment, rather than the reverse?

The new science of Socionomics says that is the way it works.

A new web-documentary explores this idea

CG_2006_0331_HHE.gif

History's Hidden Engine is the result of more than three years of research and creativity by filmmaker David Moore. Moore traveled North America to capture the insights of 17 brilliant minds, then wove them into this film. In just 59 minutes and with the help of pop songs, news footage and cultural images that are familiar to everyone, this documentary shows how social mood drives trends in movies, music, fashion, finance, economics, politics, the media and war.

link: http://www.socionomics.net/films/history/default.aspx

= =

ALSO posted : on GEI, you can chat there too

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Not to be underestimated. Consumer sentiment is a powerful force and when it is joined by market pressures some interesting things begin to happen. IMHO there is a wide spread perception that house prices are too high and the slowing in the rate of HPI by more than 50% compared with 2004 reflects this fact. Not only can people no longer afford to buy houses that have no fiscal relationship to earnings but they fear doing so. Even the VIs are worried about reporting further increases in HPI by adding that it is not going to last or will moderate soon. They are watching the bubble and its wobbling dangerously amid numerous hazards each of which could be the trigger to allow the air to rush out. Right now, its the IR needle that is scratching the surface of the bubble...... :o

Moore's work in the "Bowling for Columbine" was excellent and it is sad that he ruined his reputation somewhat with the conspiracy theory out-takes on the Bush administration in the follow up film.

Edited by Realistbear

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The Hemline Indicator

Odd as it sounds, the theory that hemlines and Wall Street move in tandem actually has some validity

hemline-indicator.jpg

An MBA from Harvard first publicized the "hemline indicator," which observes (correctly) that skirts tend to move up the leg in bull markets, and back down in bear markets. Yet Bob's analytical work has moved beyond simple observations, and gets to the "why" that explains the strong link between cultural and stock market trends.

The hemline indictor reflects the positive/negative collective mood in fashion trends, yet there's an ironic contrast when it comes to sex. Bull markets emphasize romance & relationships, which explains rising birth rates. But sex gets raunchy in bear markets. It's no coincidence that R-rated movie content and pornography became cultural staples as the Dow Industrials went sideways/down in the late 1960s and into the 1970s. Now this period is actually being celebrated with a documentary titled "Inside Deep Throat." In fact the porn business is exploding on the Internet, among cable subscribers, and beyond; Jenna Jameson's tell-all about her time in the industry topped the best-seller charts for six weeks last year.

All this came to mind this morning as I read a Boston Globe article titled, "What happened to the anti-porn feminists?"

Good question, yet it's one which this otherwise engaging article never truly answers. It correctly recites the role of many feminists who tried and sometimes succeeded in getting anti-porn legislation passed during the 1980s-1990s; but as for why their influence has vanished in recent years, the closest the story gets is this quote from anti-porn feminist Catharine MacKinnon:

''The data just show that pornography sets community standards, so the more pornography there is, the less will be seen to be wrong with it. It's just its own intrinsic dynamic."

Of course, this only begs the question of why the spreading pornography trend is so strong. It would never occur to most people that the answer starts with the bear market in stocks that began in 2000... yet it does.

@: http://www.elliottwave.com/features/defaul...id=1555&time=pm

= =

NO FRUGALITY in a time of Housing Excess ??

ERECTION INDEX : where is the Next "Empire State Building" going up??

..........................

At a height of 1,250 feet, the Empire State Building was to be the tallest building in the world.

It was the late 1920s, and America was the greatest nation on earth, as President Hoover explained. Caught up in the excitement, millionaire speculator J.J. Raskob forged ahead on his plans to build the hundred-story Empire State Building.

The building was completed in 1931, two years after the stock market peak.

Empire-State-Building-4.jpg

Planned during the stock market mania of the late 1920s the Empire State Building (along with the Chrysler Building built at the same time) is a classic example of "The Erection Index" at work... Today I'll reveal this little-known index, and give you a specific way to use it in your portfolio for maximum returns.

How The Erection Index Works

The Erection Index - the idea that stock markets crash soon after the plans for the world's tallest building are hatched - has a remarkable track record.

As good times progress to bubble times, people forget about risk. And bad investments are made.

People buy drastically overvalued stocks. Business are financed that shouldn't be. And rich guys build really tall buildings.

The record for the world's tallest buildings stood from the early 1930s until the late 1960s... Then the stock market entered what was called the "Go-Go Years." Good times progressed to bubble times. And plans for the World Trade Center were hatched at the peak in 1966.

The World Trade Center and the Sears Tower in Chicago were both completed in the early 1970s. Stocks did absolutely nothing from 1966 to about 1981. Those who understood the Erection Index knew a peak in stock prices (and the economy in general) was near.

The Sears Tower held the record for nearly a quarter-century, until good times turned to bubble times, this time in Asia. Foundation work on the Petronas Towers in Malaysia started amid the Asian stock frenzy of the mid-90s.

The towers were completed in time to welcome the Asian crisis in 1998. Malaysian stocks had already fallen by 69% in dollar terms in 1997... To this day, in 2004, Malaysian stocks are still 50% below their 1997 peak.

China's Crash: What The Erection Index Says Now

So where's the next "world's tallest building" being built? You guessed it... China.

Scheduled for completion in 2007, the Shanghai World Financial Center is on track to become the new world's largest building.

Buy into the China boom now if you like. You may make a ton of money. But remember the lesson of the Erection Index. And be willing to sell. Based on the history of the Erection Index, sometime in 2005-2006 should be about right.

Edited by HollandPark

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Well, not exactly a documentary on crowd behaviour, more a sort of promo for the new “religion” of Socionomics, but interesting nevertheless. I must admit to almost choking with incredulity while drinking my coffee :D, but even after watching the whole thing I'm still not too clear about the main principle.

Anyway, I think the structure might be something along these lines (?) …

1. Social mood = Stock market sentiment (i.e. they correlate, skirt lenght index)

2. mood precedes and drives events (not the other way around)

3. events (e.g. Enron scandal) produce other events, but in ways determined by social mood (bad mood -> lots of legislation to protect; good mood -> brush it off).

4. mood follows the Elliot Wave Pattern (this introduces fractals, the golden ratio, fibonacci numbers, and logarithmic spirals as an expression of nature’s underlying structure) and therefore is predictable (let’s be generous, and say probabilistically ;))

5. predicting the stock market (and equivalently, by implication social mood) using Elliot Wave Theory is good for making money, directly via investment, and indirectly by predicting social trends (i.e. shopping, marketing opportunities)

But the whole thing actually rests on the rather wobbly looking credibility of the Elliot Wave stuff, so this is where to start with a debunking/validation. :unsure:

Edited by spline

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Good review, Spline.

I think the Elliotwave stuff is an imperfect tool for predicting the stockmarket.

If you have three EW analysts, you may get three different forecasts.

But the social mood stuff is fascinating. There is no doubt that optimism runs right through a culture.

When people feel good, they spend more, they party more, they buy and build more properties,

and teh throw money at their favorite stocks in the stock market.

The "erection index" is well named. People get an exuberant edge to all facets of life and business.

Women wear shorter skirts, while men, when they are through chasing the ladies in the short skirts,

rush out to plan tall buildings.

photo01.jpg

It happened in 1929, when the Empire State Building was planned. And it is happening again in Shanghai,

where the new World Financial Center is being built.

By the time the Empire State Building was finished, the US was in depression. Will it happen again in China?

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I must admit, I was quite impressed by the Sex Pistols triggering a long late-1970s positive stock market run and the Spice Girls signalling the end of it. :)

I sort of agree with the idea of an underlying social mood correlation, although I’m not sure about the examples they used – it all looked rather cherry picked – but I would guess that some good correlations might be found. But inversion of the correlations to get trends (e.g. brown coats this Xmas) seemed a bit optimistic and over specific, but clearly one could imagine correlating a proposed marketing strategy against a prediction and get some kind of good idea / bad idea conclusion.

The curse of the “f*#k-off “ buildings sounds quite good - any group so confident and arrogant to build one of these is probably also not paying too much attention to where it's going… :o

I’ve noticed some interesting things about crowd behaviour - one is the idea that when individuals in a crowd act randomly (say walking across a bridge, or buying houses) the effects obviously add up randomly (smallish, proportional to the square root of the number involved) but even quite a small external event can get them all in step (maybe the bridge wobbles, or we have press headlines) and then they act more in unison and with a much bigger effect (adds up linearly, proportional to the number) and then the dynamic can grow to almost unstoppable proportions (e.g. Millenium bridge, house prices). It’s about the way external things can change random actions into organised ones and results in a huge amplification of the original effect.

Edited by spline

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Kong should be on that Building

kongempire_215.jpg

He, the King of the Beasts, is part of the story. The wildness inside of us all, who can be seduced by a beauty in a short skirt, before he falls from a great height, is the story of markets- Isn't it?

Edited by HollandPark

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Fascinating organisation and ideas. I watched the video and looked at their home page.

I was particularly interested in the chart on their homepage which compared the old and (their) new way of thinking about cause and effect, much of it is based on how your mood leads to different consequences and not visa versa.

It got me thinking about what they would say about the relationship between house prices and interest rates.

The "old" way of thinking would say:

* The lowering of interest rates lead to the rising of house prices.

The socionomic way of thinking would say that:

* The rising of house prices lead to the lowering of interest rates.

That then got me thinking about how they would view the relationship between rising interest rates and house price falls:

The "old" way of thinking would say:

* Rising interest rates lead to house prices falls.

The socionomic way of thinking would say:

* House price falls lead to rising interest rates.

So on that basis, will we have to wait for prices to fall before interest rates start going up?

Also, please can someone kindly update the graph on the front page to show the 1st qtr for 2006, which unfortunately I think will show an upward trend, or if Dr. Dubb is reading this, is this the start of the 2nd shoulder we have been waiting for?

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I'm not sure that i get that.

Socionomics does not that one simply reverses the direction of cause and effect.

I thik it says that both Mood and Stock prices are driven by the same instincts.

Something causes us to:

+ feel good, and when when feel good,

+ we buy stocks

But those good feelings do not run on forever, there are limits.

And maybe there are patterns which may help us to identify those limits.

And once those limits are hit, moods shift, and stock prices move with them.

When we are strongly driven by moods, we can easily ignore news or facts which do not

fit in with our moods. And the Crowd can deny important fundamental facts for a long time.

Dont we see such an unwillingness to accept facts (risks of high debt, for instance), in the bullish

stock and property markets? Then when mood shifts, these negative facts will suddenl be evident

again.

I think this is how markets really work

Edited by HollandPark

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I’ve just had a quick look at one of the Prechter articles ...

He seems to be saying (but I'm re-writing here) that people are biologically programmed to behave in particular waya, and this native or hard-wired behaviour has been moulded by evolution in favour of group survival (this is the super organism idea, like a swarm of ants) but that in financial situations this programming is often counter-productive and actually dangerous (not sure why, but seems true). More rational thinking can override the hard-wired responses, but stress/fear re-assert it, so that in financial situations we have a potential instability: an inadvertent hard-wired response leads to poor results, which induces fear, which in turn disables rational thought, leading to more (inappropriate) hard-wired responses, and so on in a vicious circle.

This looks like a socio-biological version of the computer automatic trading problem – if everyone runs the same crude algorithm (if down, sell; if up, buy more) the system becomes unstable and driven to extremes when other effects determine the outcome, or flip it’s state.

The conclusion must be that patterns in market behaviour are just an emergent property of a system with a large number of highly correlated participants running simple biological based rules. Shouldn’t be too difficult to simulate that!

Edited by spline

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life as we know it is:

patterns in behaviour which are just a large number of highly correlated participants running simple biological based rules. Shouldn’t be too difficult to simulate that!

and this is what kraftwerk were trying to tell us in 1983 with robots....

Edited by right_freds_dead

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life as we know it is:

and this is what kraftwerk were trying to tell us in 1983 with robots....

This recently released BBC secret footage taken undercover at an Ins1d3Tr4ck seminar reveals how a newly signed-up group of market participants went about considering their next BTL portfolio acquisition; the buyer on the right has been offered an off-plan luxury waterfront apartment but is tempted by the prospect of a whole street of boarded-up terraces in Bury. A logarithmic spiral just out of shot clinches the decision. ;)

werk3.jpg

Edited by spline

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Guest Bart of Darkness

and this is what kraftwerk were trying to tell us in 1983 with robots....

I remember Kraftwerk making robot versions of themselves. In fact the robots were such a good likeness that they eventually split off and formed a Kraftwerk tribute band (Man-Machine) which still tours to this day.

Those wacky Germans.

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More first impressions - some good ideas, but rather buried and struggling to get out :) ]…

Interesting that Elliot, apparently, was impressed by Marconi, who, when tying to demonstrate that radio waves could cross the Atlantic, certainly didn’t let scientific theory get in his way (then, as now, radio waves travel in straight lines and don’t travel well under water, and a straight line between Cornwall and Newfoundland dips well below sea level) and it actually worked (the then undiscovered ground wave, and tropospheric “bounce” helped him out).

Anyway, it looks like this radio thing inspired Elliot to think in terms of “fields” as external in some way to the things like atoms and the other bits and pieces that clutter up the place, leaving him free dream up all sorts of weird and wonderful, and conveniently unobservable, fields that are supposed to pervade social life quite independent of people. This seems fundamentally wrong, since the emergent behaviour of complex systems usually follows naturally by aggregating over all the constituent parts, and is one of the interesting things about complex systems, so to deny this seems stupid. In fact, the study of pattern formation and self-organisation is a perfectly respectable and mainstream part of modern dynamics.

But having introduced “social mood” waves and fields to aggregates of individuals, the theory then takes a lurch downhill via a bit of equivocation (waves = field theory, waves = wobbles on a graph) and ends up as a sort of glorified chartism not dissimilar to graphology. I agree that there is an apparent compelling structure in the patterns of a stock market graph, and they look almost tractable, but these guys seem more intent on building a staggeringly huge mountain of philosophy of science cr4p and elevating Elliot to sainthood instead of cutting to the chase and applying the proper tools.

In a nutshell all the high-sounding nonsense boils down to adding a new variable, let’s call it sentiment or social mood, and providing a new equation based on some sort of social dynamics. This is very sensible and worth doing.

Edited by spline

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Moore's work in the "Bowling for Columbine" was excellent and it is sad that he ruined his reputation somewhat with the conspiracy theory out-takes on the Bush administration in the follow up film.

rb, I think you've mistaken Michael Moore ("Bowling for Columbine" and "Fahrenheit 911") for David Moore.

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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