[Article] The Stock Market is not Physics – Part II
Another Example of Rationalization, Ripped from the Headlines.
Another Example of Rationalization, Ripped from the Headlines.
This essay by Robert R. Prechter, Jr. originally appeared in: The Colours of Infinity. Clarke, Arthur C., et al (2004). UK: Clearpress, pp. 128-139 View PDF R.N. Elliott’s Discovery In the 1930s, Ralph Nelson Elliott discovered that aggregate stock market prices trend and reverse in recognizable patterns. In a […]
So in the face of abundant evidence to the contrary, why does the media (and much of Wall Street) still embrace the myth that news moves markets?
How does one apply socionomic techniques to economic forecasting? A socionomist knows that the stock market is a meter of social mood, which is the engine of social progress and regress. Therefore, the current-time change in the stock market is an immensely useful indicator of upcoming economic change.
Since the Great Depression, we have had immense improvements in science and technology. Given seven additional decades of data collection and progress in econometric techniques, one might presume that the forecasting tools of macroeconomics have become vastly more effective than their predecessors of 1929. Yet as recently as 1988, some leading economists went on the record about the profession’s lack of progress.
The fundamental observation of the new science of socionomics is that social mood, which is patterned according to the Wave Principle, is the generator of social action, be it economic, political or cultural. The key insight of socionomics is that the direction of causality between social mood and social action is precisely the opposite of that which is almost universally presumed; the former dictates the character of the latter, not vice versa.