Social mood dictates where the stock market and the economy heads. When the social mood changes, it first gets recorded in the stock market because it is easy for investors to express their opinion in the market. After that, the mood reflects itself on the economy, in the form of layoffs, hiring, consumers shopping, or borrowing, or paying off debt. Here is Bob Prechter explaining a socionomic view of the markets.
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Robert Prechter’s Minyanville Interview about Socionomics and Markets:
We're excited to announce that our friends at Elliott Wave International are offering a free 50-page report from Robert Prechter. Although originally published in 1985, “Popular Culture and the Stock Market” is so timeless and relevant that USA Today covered its insights in a recent November 2009 article.
The report walks you through the ups and downs of the DJIA -- our most sensitive meter of social mood -- and analyzes the trends in popular music and TV shows through periods of positive and negative social mood over the past century. It reveals how social mood as reflected in the stock market actually defines popular culture.
Mainstream media would like you to believe that the news are driving the markets. They always find a reason to explain why stocks go down or go up. The truth is everyday there are good news and bad news and the media picks the headline to explain the stock market action that has already happened. Sometimes the headline changes upside down during the same day: Here is an example of how news does not drive the stock market, but it is the social mood that ultimately decides how these news are interpreted. According to socionomic theory, news is the result of prevailing social mood. Thus, good news tend to appear at market tops, and bad news appear at market bottoms.
Earnings Do not Drive the Stocks
Similar to news, earnings are a lagging indicator. As social mood improves, people first act in the stock market, drive prices up. After the market moves, effects of positive mood is seen in the rest of the economy. This is why during a recession, the stock market rallies first and the recession is declared over as the rest of the economy improves. Similarly, a bull market tops with good earnings and earnings decline as the stock market declines. Worst earnings appear at market bottoms.
The coming 2011 Socionomics Summit on April 16 in Atlanta will indeed discover "New Horizons" -- which is precisely what this emerging science has done time and again in recent years.
Attendees will be able to hear, ask questions of, and mingle with 14 of the foremost academics, writers and researchers who contribute to the science of socionomics. Even now, their innovative work is helping to define the critical role that social mood plays in human affairs. The featured speakers include:
· Successful hedge fund manager Scott Reamer
· Indiana University professors Johan Bollen and Huina Mao, contributing authors of the widely-reported academic paper "Twitter mood predicts the stock market"
· Scholar and best-selling author of Mood Matters, John Casti
· Emmy award-winning Minyanville sage Kevin Depew
· The man who discovered socionomics, Robert Prechter
This list is just the beginning. Speakers also include the Socionomics Institute's research fellow at the University of Cambridge, Matt Lampert, as well as in-house researchers Alan Hall and Euan Wilson, whose research continues to demonstrate how social mood drives social action.
Please know that the phrase "new horizons" is no exaggeration. As published in The Socionomist, our recent studies of social mood have anticipated a mind-boggling series of global trends and events:
· "War and Peace in the Middle East" (Dec. 2010) was weeks ahead of the violence and shockwaves of protest that changed the political landscapes of Egypt, Tunisia, Yemen, Libya and beyond.
· "Authoritarianism" (April 2010) forecasted increased internet regulation and warned of a possible cyber war -- months before the WikiLeaks controversy broke.
· "The Coming Collapse of Modern Prohibition" (July 2009) anticipated the dramatic escalation of violence in Mexico's deadly drug war. It also called for growing American tolerance of marijuana use.
· "Authoritarianism" (April 2010) warned of unprecedented new forms of government control even in ostensibly free countries like the U.S. Since then, news events include the advent of secret government GPS controls on cars, airport pat-downs and document checks on train travel inside U.S. borders.
· "The Developing European Tinderbox" (Dec. 2009) preceded the biggest story in Europe in 2010 -- the re-kindling of old ethnic and national hostilities and the possible coming dissolution of the euro.
For more information about the 2011 Socionomics Summit: New Horizons in the Study of Social Mood, simply follow this link.