Tag Archives: socionomics

Socionomics and History; The Bubble in Social Media


The History of the Markets through the lens of socionomics

So does social mood CAUSE events or vice-versa? I found the video below interesting but socionomics seems too general for useful application. 

VIDEO: http://www.socionomics.net/hhe-part-1/#axzz2uM3BV7in


Note the date on the above Time cover–August 21, 1999. America was at its height of exuberance. The NASDAQ peaked in March of 2000 seven months later. 

Social Mood and the Stock Market and Presidential Elections

Sex and the Stock Markethttp://www.socionomics.net/1999/09/stocks-and-sex-a-socionomic-view-of-demographic-trends/#ixzz2uM4DB7aq

Talk about social mood? How about a bubble in social media? Do they ring a bell at the top? (Remember the AOL/Time Warner merger).

Facebook’s $19 billion takeover of WhatsApp (largely financed by issuing more of FB’s inflated stock, hence the price tag is in a way actually an illusion) has predictably produced a very wide range of reactions. Jeff Macke at Yahoo’s Daily Ticker was describing it as a ‘brilliant deal‘, heaping scorn on critics who in his opinion just don’t understand the value of a business employing metrics other than the money it actually makes (or stands to make in the future even under very generous assumptions, since a major attraction of the service is that it is actually free for one year, and thereafter costs a pittance). “They’ll eventually figure out how to make money from it”, according to Macke. Perhaps; Facebook’s shareholders were no doubt relieved to hear it.

On the other end of the spectrum of reactions,  Peter Schiff is criticizing it as just another outgrowth of the latest Fed-induced credit and asset bubble, noting that such pricey takeovers are typically only seen when oodles of money from thin air have flooded the system.

A great post: http://www.acting-man.com/?p=28860

Don’t forget to improve your investing by STUDYING the whole movie–ROUNDERS.  


Pond Hockey

www.cafehayek.com… is from David Hume’s 1742 essay “Of Public Credit,” (here from page 350 of the 1985 Liberty Fund collection of Hume’s essays, edited by the late Eugene Miller, Essays: Moral, Political, and Literary) (original emphasis):

[O]ur modern expedient, which has become very general, is to mortgage the public revenues, and to trust that posterity will pay off the incumbrances contracted by their ancestors: And they, having before their eyes, so good an example of their wise fathers, have the same prudent reliance on their posterity; who, at last, from necessity more than choice, are obliged to place the same confidence in a new posterity.

Moods and Markets (Socionomics)

Of course, mood and emotion have an influence on people’s actions. I view socionomics/psychology as a supplement to but not a substitute for understanding Austrian Business Cycle Theory. In the interests of openness and inquiry I am posting on socionomics.  Some may view it as star-gazing. YOU decide.

Socinomics is the study of how changes in social mood motivate and affect social actions and our behavior, not just in the financial markets but also in politics and popular culture. Socioeconomics, on the other hand, looks at how changing economic conditions and social conditions relate. The two fields have different views of cause and effect.

Mood is defined as our underlying confidence which is all about the future and how certain we are, not only about what we believe is ahead but whether our own immediate choice of action—our decisions–will be successful.

The reality, however, is that the future is in no way correlated to our level of confidence. The future is going to be what it is going to be whether we are confient about it or not.

For example, in June 2011, Wells Fargo exited the reverse mortgage business (www.wellsfargo.com/press/2011/20110616_Mortgage) by stating that “The decision was made based on today’s unpredictable home values.”  The press release implies that when Wells Fargo entered the reverse mortgage business in 1990, the company thought that home values were predictable.  The reality is that home values were just as predictable or unpredictable in 2011 as they were in 1990.  When we are confident (good mood) we tend to believe that we can predict accurately and when we are not confident, we view the world as more unpredictable. Read more below:

Socionomics in a nutshell and Social Behavioral Dynamics_Robert Prechter

Online Resources: www.socionomics.net and www.horizonpreference.com

Books: One of the greatest investors of all times was John Templeton who said to buy at the point of “maximum pessimism.” I have been looking for books that explain how to do this, or at least make an attempt.

  • Moods and Markets: A New Way to Invest in Good Times and in Bad (Minyanville Media) [Hardcover] Peter Atwater (Author)
  • The book, “Mood Matters,” makes the radical assertion that all social events ranging from fashions in music and art to the rise and fall of civilizations are biased by the attitudes a society holds toward the future. When the “social mood” is positive and people look forward to the future, events of an entirely different character tend to occur than when society is pessimistic. The message of the book – that the mood of a society dictates what will happen rather than the reverse – is counterintuitive at first sight, but supported by many quite surprising and convincing examples.
  • Mood Matters: From Rising Skirt Lengths to the Collapse of World Powers [Hardcover] byJohn L. Casti (Author)