The Fall of (A) World Hero(s)
Star banker replaces Cayne
as Bear Stearns CEO
January 08, 2008
NEW YORK (Reuters) - Bear Stearns Cos Inc on Tuesday
turned to its star investment banker, Alan Schwartz,
to replace James Cayne as chief executive and revive
the company's badly damaged mortgage franchise.
Yahoo.com, Jan 9,2008
Pressure on Morgan Stanley's Mack
Morgan Stanley CEO John Mack, who set out to restore the firm's "swagger," was left shaken after the company said it would write down $9.4 billion in mortgage assets, post a quarterly loss and take a $5 billion investment from China. WSJ, Dec 20,2007
How Zoe Cruz Lost Her Job
Morgan Stanley CEO Mack lost confidence in Zoe Cruz, who was ousted as co-president, in the aftermath of the firm's $3.7 billion in losses over the credit crisis.
Microsoft (MSFT)
Gann's Angles & Squaring Methods
In his trading course published in the early 1950s, W.D.Gann said geometric angles were "the basis to his forecasting method." Gann used many diverse, complex and exotic techniques but angles and squaring seem to have been his primary methods. Therefore, this article concentrates mostly on the angles and
squaring.
First, the markets will usually go up or down, on average, at a percentage inclination or declination paralleling one of the geometric angles. Second, the market will frequently find support or meet resistance when the price hits an angle going in the opposite direction.
A market that is declining will frequently receive support and possibly rally as decending price hits an angle drawn up from an important swing low due to the angle squaring and gravitational fulfillment taking place. If in fact , it is a bull market, the price will likely ascend to the next steepest angle above the advancing
support angle as a result of gravitational attraction.
In a bear market, the price may only receive minor support from the below up sloping bull angle and not rally to the next greatest steeper bullish angle. Instead,
it is more likely, due to gravitational attractions, to move to the least steep declining angle drawn down from a prior important swing high or crash through
the underlying bull angle support without a rally taking place.
A market that is advancing will frequently receive resistance and possible decline as the advancing price hits an angle drawn down from an important swing high due to the angle squaring and gravitational fulfillment taking place. If in fact, it is a bear market, the price will likely descend to the next steepest angle below the
decllining support angle as a result of gravitation.
Related articles:
Martina Hingis
Absturz eines Wunderkindes
Die Schweizer Tennisspielerin Martina Hingis hat zugegeben, in Wimbledon positiv auf Kokain getestet worden zu sein. Das ehemalige Tennis-Wunderkind erklärte jetzt seinen Rücktritt vom aktiven Sport. stern.de zeigt eine außergewöhliche Karriere vom wundersamen Aufstieg bis zum harten Absturz. Stern.de, Nov 2,2007 Heroes>>>
Calling Reversals for Public Icons on the Basis of Extreme Events
Even though one may not have charts of superstars' waves handy, sometimes events are so extreme as to serve as a top signal. However, just because someone receives an award does not mean that this persona is peaking, and just because he is the subject of a negative article does not mean that this persona is bottoming. To serve as such a signal, an event must truly be an extreme social assessment of value.One major top in the DJIA was July 1990. That Year also brought Michael Jackson
a record deal with Sony Corp. And what happened to MJ in between?
The Rude Awakening
November 22,2007
How Much is $38 Billion?
by Eric J. Fry
Business on Wall Street has never been better! Oh sure, earnings have
tumbled, entire divisions have disappeared and tens of billions of dollars of
shareholder wealth have vanished from the balance sheets of leading lending
institutions. Nevertheless, bonuses at the five largest Wall Street firms
jumped 9% above last year's record-setting tally.
"Never in the history of Wall Street have so many earned so much in so little
time," a Newsday columnist remarked one year ago. The columnist was referring
to the then-record $36 billion in year-end bonuses that Goldman Sachs, Morgan
Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns dispensed to its
employees at the end of 2006.
Last year's record payout seemed audacious, but not quite outrageous. By
contrast, Wall Street's 2007-vintage bonus pool is both audacious AND
outrageous, as well as disgusting, reprehensible, over-the-top and rapacious.
This year, Wall Street's five largest brokerage firms will dole out a new-
record $38 billion in year-end bonuses. The hefty number would seem merely
audacious if Wall Street's shareholders were sharing the wealth. But they are
not. "Shareholders in the securities industry are having their worst year
since 2002," Bloomberg News observes, "losing $74 billion of their equity."
Just think how large the bonuses would have been if every Wall Street firm
had gone completely bankrupt...or at least as bankrupt as Wall Street's
ethics.
During 2006, the stock market climbed and Wall Street flourished. So the
then-record bonuses possessed at least some tenuous connection to legitimacy.
But in 2007, what rational could possibly exist for establishing a new-record
payout?
Maybe just this: because they can get away with it. We would note, for
example, that sanctions imposed by the Securities and Exchange Commission in
fiscal 2007 fell to the lowest level since 2002. The SEC collected only $1.6
billion in fines this year, compared with more than $3 billion in each of the
previous three years. Perhaps no direct connection exists between soaring
Wall Street bonuses and shrinking SEC penalties, but a symbolic connection
certainly exists.
Wall Streeters already believe that "what's yours is theirs;" it's in their
professional DNA. So if the SEC turns a blind eye to the processes that
promote institutionalized avarice, who else could possibly stand in the path,
other than a few grumpy, ill-mannered journalists? The large bonuses would
not be so galling if they tended to go up as well as down. But they don't.
The connection between merit and pay disappeared a long time ago. As recently
as ten years ago, the bonus pool for New York City's finance-company
employees totaled less than 90% of the net income of NYSE brokerage firms.
Today, the relative size of the bonus pool has doubled to about 180% of net
income.
To put it kindly, Wall Street bonuses possess a distinct upward bias. In
fact, Bloomberg notes, "The last time bonuses declined was 2002 when the
Standard & Poor's 500 Index fell 23 percent, and Enron Corp. and WorldCom
Inc. went bankrupt." But these financial hiccups from 2002 seem relatively
tame alongside today's epic credit-market devastation. Tens of billions of
dollars are disappearing from the balance sheets of America's largest lending
institutions. Tens of billions more might disappear before the bust has run
its course. In this context, dispensing tens of billions to millionaire-
employees seems imprudent, if not utterly asinine. But then, lest we forget,
Wall Street is forever and always about money – both making it and taking it.
Let's try to put this year's bonuses in perspective by having some fun with
numbers.
Just for kicks, let's ask ourselves, "How much is $38 billion?"
Well, for starters, it is more money than Wall Street's five largest
brokerage firms – combined – earned during the last 12 months. $38 billion is
also more than the combined earnings of these five firms during all of 2004
AND 2005.
It is more than the annual GDP of Guatemala or Costa Rica. It is seven times
more than the annual budget of the National Cancer Institute (NCI), America's
principal agency for cancer research.
Looking beyond our own shores, $38 billion is three times more money than the
entire world spent on humanitarian aid last year. $38 billion is twice the
sum necessary to provide basic health care to every child in the world, and
three times the sum necessary to provide clean drinking water to every child
in the world.
$38 billion does pale alongside some annual expenditures, however. It pales
alongside the $59 billion the world spends on golf every year, or the $118
billion it spends on wine (I'm guilty). And in particular, $38 billion pales
alongside the $794 billion the world spends waging war or preparing to wage
war.
"Every gun that is made, every warship launched, every rocket fired
signifies, in the final sense, a theft from those who hunger and are not fed,
those who are cold and are not clothed," President Dwight Eisenhower once
remarked. "The world in arms is not spending money alone. It is spending the
sweat of its labourers, the genius of its scientists, the hopes of its
children...this is not a way of life at all in any true sense. Under the
cloud of threatening war, it is humanity hanging from a cross of fire."
Admittedly, excessive compensation regimes that bear no legitimate connection
to merit are not as costly to humanity as warfare, but these regimes
nevertheless impose serious covert costs. They "steal" money from
shareholders, cultivate a risk-taking, "lottery" mentality among financial
firms and sanitize unbridled avarice as "merit-based pay." Excessive
compensation schemes also help to legitimize extreme socio-economic
disparities. As such, these schemes work to squander the nation's collective
"sweat," "genius," and "hopes"...just like warfare.
The stewards of public companies do not deserve mega-million bonuses. Not
once, not twice, not ever. They are the EMPLOYEES of public companies that
are OWNED by the shareholders. They are not the lords of their domain with
the right to tax the productivity of the shareholder/serfs. The era of the
overpaid corporate stewards is corrupting and crippling American dynamism.
Obviously, most employees within the Wall Street rank and file deserve every
cent of their year-end bonuses. But most of those at the top of the ranks do
not. So maybe $28 billion would have done the trick, saving $10 billion for –
oh, I dunno, boosting shareholder equity against the next moronic credit
debacle that America's financial chieftains bring down upon their abused
shareholders.
There's no denying that greed and money go together – just like Ginger Rogers
and Fred Astaire...or maybe more like Bonnie Parker and Clyde Barrow. So we
cannot really blame Wall Street for being what it is. But we can avoid
dancing on the same stage...or riding into an ambush in the same 1934 Ford V-
8, so to speak.
Happy Thanksgiving!
Herding Psychology and Financial Markets
As primitive tool of survival, emotional impulses from the limbic system impel a desire among individuals to seek signals from others in matters of knowledge and behavior and therefore to align their feelings and convictions with those of the group. The desire to belong to and be accepted by the group is particularly powerful in intensely emotional social settings, when it can overwhelm the higher brain functions. The less that reality intrudes on the thinking of a group, the stronger is its collective conformity. Dependence most easily substitutes for rigorous reasoning when knowledge is lacking or logic irrelevant. In a realm such as investing, where so few are knowledgeable, or in a realm such as fads and fashion, where logic is inappropriate and the whole points is to impress other people, the tendency toward dependence is pervasive. Trends in such activities are steered not by decisions of individual minds but by the peculiar collective sensibilities of the herd. In the 1920s, Cambridge economist A.C. Pigou connected cooperative social dynamics to booms and depression.
His idea is that individuals routinely correct their own errors of thought when operating alone but abdicate their responsibility to do so in matters that have strong social agreement, regardless of the egregiousness of the ideational error. In the realm of finance, as R.N. Elliott phrased it, Pigou maintained “that an error of optimism tends to create, throughout the community, a certain measure of psychological dies and gives birth to an error of pessimism.” In Pigou’s words, “Apart altogether from the financial ties by which different businessmen are bounded together, there exists among them a certain measure of psychological interdependence. A change of tone in one part of the business world diffuses itself, in a quite unreasoning manner, over other and wholly disconnected parts.”
“Wall Street” certainly shares aspects of crowd, and there is abundant evidence that herding behavior exists among stock market participants. Myriad measures of market optimism and pessimism 4 show that in the aggregate, such sentiments among both the public and financial professionals wax and vane concurrently with the trend and level of the market. This tendency is not simply fairly common; it is ubiquitous. Most people get virtually all of their ideas about financial markets from other people, through newspapers, television, tipsters and analysts, without checking a thing. They think, “Who am I to check?
These people are supposed to be experts.” Many people are emotionally dependent upon the ticker tape, which simply reports the aggregate short-term decision-making of others. This dependence is nearly universal, even among long-term investors. Financial markets induce a form of hypothesis in most people. Outwardly, they appear rational. Inside, their unconscious is in control. They are driven to follow the herd because they do not have firsthand knowledge adequate to form an independent conviction, which makes them seek wisdom in numbers.The unconscious says: You have too little basis upon which to exercise reason; your only alternative is to assume that the herd knows where it’s going. In 1987, three researchers from the University of Arizona and Indiana University conducted a sixty laboratory market simulations using a few as a dozen volunteers, typically economists students but also, in some experiments, professional business men. Despite giving all the participants the same perfect knowledge of coming dividend prospects and then an actual declared dividend at the end of the simulated trading day, which could vary more or less randomly but which would average a certain amount, the subjects in these experiments repeatedly created boom-and-bust market profile. The extremity of that profile was a function of the participants lack of experience in the speculative arena. Head research economist Vernon L. Smith came to this conclusion: “We find that inexperienced traders never trade consistently near fundamental value, and most commonly generate a boom followed by a crash….”
Groups that have experienced one crash “continue to bubble and crash, but at reduced volume. Groups brought back for
a third trading session tend to trade near fundamental dividend value.” In the real world, “these bubbles and crashes would be a lot less likely if the same traders were in the market all the time,” but novices are always entering the market. While these experiments were conducted as if participants could actually posses true knowledge of coming events and so-called fundamental value, no such knowledge is available in the real world. The fact that participants create boom-bust pattern anyway is overwhelming evidence of the power of the herding impulse. It is not only novices who fall in line. It is a lesser-known fact that the vast majority of professionals herd just like the naïve majority.
Chart: Elliottwave International
Figure 8-2 shows the the percentage of cash held at institutions as it relates to the level of the S&P 500 Composite Index. As you can see, the two data series move roughly together, showing that professional fund managers herd right along with the market just as the public does. Appearent expressions of cold reason by professionals follow herding patterns as well. Finance professor Robert Olsen recently conducted a study of 4000 corporate earnings estimates by company analysts and reached this conclusion:
Experts' earnings predictions exhibit positive bias and disappointing accuracy. These shortcomings are usually attributed to some combination of incomplete knowledge, incompetence, and/or misrepresentation. This article suggests that the human desire for consensus leads to herding behavior among earnings forecasters. Olsen's study shows that the more analysts are wrong, which is another source of stress, the more their herding behavior increases. Equally important, the more their herding behavior increases, the less accurate their estimates get. This is a self-reinforcing system with failure the motivator of further failure. The reason that forecasters' inaccuracy worsens with herding is that the net valuation of the stock market is the result of herding. To forecast on the basis of the current sentiments of the herd is to "forecast" the present mood, not futures events. Success is simply a matter of whether the present mood maintains, which it usually does not. How can seemingly rational professionals be so utterly seduced by the opinion of their peers to effect that they will not only hold, but change opinions collectively?
Recall that the neocortex is functionally disassociated from the limbic system. This means not only that feelings of conviction may attach to utterly contradictory ideas in different people, but that they can do so in the same person at different times. In other words, the same brain can support opposite views with equally intense emotion, depending upon the demands of survival perceived by the limbic system. This fact relates directly to the behavior of financial market participants, who can be flushed with confidence one day and in a state of utter panic the next. As Yale economist Robert Schiller puts it, "You would think enlightened people would not have firm opinions" about markets, "but they do, and it changes all the time." In each case, they are fully capable of explaining their new conviction, all such utterances being simply (yet sometimes superficially brilliant) rationalizations obediently generated by the neocortex. As market analyst Paul Macrae Montgomery explains, "to the limbic system, the phrase 'net present value of future cash flows' is meaningless because its only sense of time is now and only value is pleasure or relief from stress."
Throughout the herding process, whether the markets are real or simulated, and whether the participants are novices or professionals, the conviction of the rightness of stock valuations at each price level is powerful, emotional and impervious to argument. Gustave Le Bon, a pioneer in the study of crowd psychology, said a century ago, "It were as wise to oppose cyclones with discussion as beliefs of crowds...Time alone can act
upon them." (The Wave Principle of Human Social Behavior, 1999 by Robert R. Prechter)
DJIA 1982 - 1987
open chart
SPX daily, January 2000 - December 2000
S&P 500 displays 0.885 retracement
Writes Elliott Wave International, Market Watch, October 24, 2006:
The Dow 36,000 and Dow 100,000 authors are back in the news. They say their ideas are still valid, even though their books are for sale on Amazon for one cent (literally). The chief investment officer of a New York investment firm says, "These guys come out of the woodwark when society is foaming at the mouth and
receptive to these things."The word "illusion" derives from the Latin word meaning, "the action of mocking," an apt term for investors' blithe flirtation with financial risk-taking. An individual can see the scary data, but groups will not, they take cues from each other rather than from evidence.
Börsen-Optimismus
Die Super-Bullen sind zurückEinigen Beobachtern ist der aktuelle Stand des Dow Jones von über 12.100 Punkten nicht genug. Sie sehen Kursziele von 36.000 und 100.000 Punkten. Und haben dafür gute Argumente.
Washington - Sie sind zurück, jene Optimisten, die für den US-Leitindex Dow Jones ein Ziel von 36 000 oder gar 100 000 Punkten gesetzt haben. Nur etwas früh sei er dran gewesen, gibt etwa James Glassman zu, Autor des Börsen-Reißers "Dow 36.000". Glassmans Buch kam Ende 1999 auf den Markt, und einen Monat später legte ein Kollege sogar noch nach: Charles Kadlec veröffentlichte "Dow 100.000". Beide Titel wurden in der Folgezeit Metaphern für die übertriebenen Erwartungen zu Zeiten der IT-Blase. Zwei Jahre nach ihrem Erscheinen hatte die Benchmark 29 Prozent verloren, und Investoren hätten sich schon über "Dow 10.000" gefreut.
Wer im Oktober 1999 bei den 30 Dow-Werten einstieg, musste vier Jahre warten, bis sich sein Portfolio wieder aus der Verlustzone arbeitete. Inzwischen hat der Leitindex den Rekord von 2000 eingestellt. In der vergangenen Woche kletterte er nach vier Gewinnjahren erstmals über 12.000 Punkte.
Zeit für die beiden optimistischen Schreiber, ihre Prognosen zu wiederholen. "Ich bin heute noch mehr davon überzeugt, dass wir am Beginn einer Wachstumsperiode stehen, und dass der Dow bis Mitte 2020 die Marke von 100.000 Zählern erreichen wird", sagt Kadlec, geschäftsführender Direktor bei J&W Seligman & Co. in New York. Auch Glassman bleibt bei dem von ihm und Co-Autor Kevin Hassett aufgestellten Ziel für das Börsenbarometer. Allerdings, so räumt er ein, werde sich der Dow nicht wie ursprünglich angenommen bis 2005 verdreifachen, sondern erst bis 2021.
Glassman und Hassett vertraten 1999 die These, Aktien seien eine sicherere Geldanlage als Anleihen. Sie beriefen sich auf Untersuchungen von Jeremy Siegel, einem Professor der Universität Pennsylvania. Dieser rechnete vor, dass Aktien seit Anfang 1800 nie Verluste brachten, wenn sie mindestens 17 Jahre gehalten wurden. Wenn Investoren dies einsähen, argumentiert Glassman, werde der Dow auf 36.000 Punkte vorpreschen. "In den vergangenen fünf Jahren ist nichts passiert, das mich davon überzeugt hätte, meine These zu revidieren", sagt der Autor nun.
Kräftiger Zuwachs in den vergangenen Jahren
Tatsächlich konnte der Dow seit 1928 im Schnitt jährlich fünf Prozent zulegen, wobei es in den letzten drei Jahrzehnten sogar zwölf Prozent pro Jahr aufwärts ging. Um sich bis 2021 zu verdreifachen, muss der Index jährlich 7,6 Prozent anziehen. "Wenn man bedenkt, dass sich der Markt alle sieben bis zehn Jahre verdoppelt hat, dann ist das nicht völlig aus der Luft gegriffen", konstatiert Barry James, Chief Investment Strategist bei James Investment Research.
Kadlec verwies in seinem Buch auf mehrere Trends, die dem US-Leitindex in den sechsstelligen Bereich verhelfen sollten: höhere Produktivität der Wirtschaft, Anlagegelder der sogenannten Baby Boomer, niedrigere Steuern, eine niedrige Inflation und Frieden. Bis auf den letzten Punkt habe sich das Umfeld bis heute nicht geändert, erklärt der 60-Jährige. Um bis 2025 das Ziel von 100 000 Punkten zu erreichen, muss der Dow jährlich etwa zwölf Prozent klettern.
Beide Aktien-Optimisten bewiesen während der Baissejahre starke Nerven und blieben im Markt.
"In einigen Jahren war ich bis zu 20 Prozent im Minus", erläutert Glassman. "Ich habe mehr Geld hineingesteckt und unter dem Strich ist es mir recht gut ergangen."Kadlec lag mit seinem Konto Ende 2002 etwa 40 Prozent unter dem Hoch von 1999, konnte den
Einbruch 2003 aber fast vollständig ausgleichen. "Ende 2004 war dasselbe Portfolio wieder im Plus",
erläutert er. "Ich habe mich an meine eigenen Empfehlungen gehalten." Die Welt online, 25.Oktober 2006
Psychology of Brokerage Strategists
Professional brokerage-house equity-allocation strategists tend to recommend a heavy weighting
in stocks just before the market falls and a lighter weighting just before the market advances.
This is normal behavior, which itself helps to set the market's highs and lows.
(Conquer The Crash, 2003, Robert R. Prechter)
Märkte
Aktienbörsen weltweit in Rekordlaune16 Märkte notieren auf historischen Höchstständen. Strategen erwarten nun nach einer kurzen Konsolidierung die Jahresendrallye. Als größtes Risiko gilt die US-Konjunktur.
Berlin - Das Parkett vibriert. Rund um den Globus sind die Börsianer in Jubelstimmung. In dieser Woche markierten - angefangen von Indien über Südafrika, Spanien und die Schweiz bis zur Wall Street - weltweit 16 Märkte Rekordstände. Sogar die eher zurückhaltenden deutschen Akteure hatten Grund zum Feiern. Immerhin kletterte der Dax am Freitag auf ein Fünf-Jahres-Hoch. Die Welt, 15.Oktober 2006
Börsenrekord:
Historischer Tag an der Wall StreetDer wichtigste US-Börsenindex knackte die Marke zum erstenmal in seiner Geschichte. Für die letzten tausend Punkte hat der Dow Jones mehr als sieben Jahre gebraucht. Doch der Allzeit-Rekord könnte
schon bald Geschichte sein.Die Autoren lieferen auch gleich die Begründung "für den neu entfachten Optimismus der Anleger" mit: Der auf unter 59 US-Dollar gesunkene Ölpreis und ein Bericht des Handelsministeriums, "der auf nachlassenden Inflationsdruck hindeutet." Weiter heisst es: "An den Aktienbörsen wird derzeit ein Idealszenario aus niedriger Inflation und robuster Konjunktur- und Gewinnentwicklung gespielt." Gespielt? "Börsianer nennen dies ein Goldlöckchen-Szenario." Die Welt online, 19.10.2006
The socionomic hypothesis explains the data. Changes in the stock market immediately reflect the changes in endogenous social mood. As social mood becomes increasingly positive, productive activity increases; as social mood becomes increasingly negative, productive activity decreases. These results show
up in lagging economic statistics as expansions and recessions. The standard presumption has no explanation for the relative timing of these two phenomena. Read moreWhen trends reach extremes, reporters no longer require the services of financial professionals to express an opinion; the continuation of the trend is so obvious to them that they become convinced that anyone can do it, and they take on the forecasting themselves. Error at such times is guaranteed.
(HSB, 1999, Robert R.Prechter) Read more
Conventional Analysts Cannot Avoid Using Trend Extrapolation
Is there a internal logical flaw in using extramarket events for market forecasting? I thinks so. If someone is bullish on stocks because interest rates have recently fallen, you are justified in asking, "How do you know that interest rates did not stop falling today, in which case stocks are about to decline?" He might respond, "well, the latest economic report shows a flat trend, which supports lower interest rates," in which case you are justified in asking, "How do you know that the economy didn't just turn up?" At some point, he must respond that he will wait for a change of some kind, a report of a stronger economy or a rate rise by the Fed. then you can ask, "How do you know that the economy report you are waiting for will not reflect the only economic uptick or that the Fed will not raise rates once and then start lowering again with the result that you will have sold your stocks at the bottom?" If he answers that he doesn't know, then he remains stuck with no basis for a forecast. If he continues to provide more causal indicators of his causal indicators , the chain is endless. Both of these answers are dead ends.His only way out of this dilemma is finally to provide a prediction based upon trend extrapolation. more often than not, an analyst pressed into this corner simply says that he sees no evidence of a change in trend for his supposed cause, an answer that relies on the fact that trends persist. The presumably trending cause (in the case of the economy) will affect the trend of the next cause (in this case Fed policy), which will then affect a market (i.e. , interest rates) that will effect the one he actually wants to predict (i.e., stocks). Since the conventional analyst cannot avoid employing trend extrapolation at some point, might we ask him, "Isn't is far easier merely to extrapolate the trend of the market that you actually want to predict?" Instead of saying, "the trend of economy is flat, which trend should continue, so the Fed should continue lower interest rates, so stocks should continue to rise until the economic trend changes," he could simply say, "the trend of stocks is up until that trend changes" That way he not only saves trouble but also avoids the pitfall of requiring his whole chain of causality to maintain itself. because history shows numerous exceptions for each supposed relationship, each step removed from the market he wishes to forecast further weakens his market conclusions. In contrast, trend extrapolation works with equal effect and lack thereof with the market he is trying to forecast in the first place. .
I have noted a sister phenomenon. When trends reach extremes, reporters no longer require the services of financial professionals to express an opinion; the continuation of the trend is soobvious to them that they become convinced that anyone can do it, and they take on the forecasting themselves. Error at such times
is guaranteed. (The Wave Principle of Human Social Behavior, 1999, Robert R.Prechter)
Calling Reversals for Public Icons on the Basis of Extreme Events
Even though one may not have charts of superstars' waves handy, sometimes events are so extreme as to serve as a top signal. However, just because someone receives an award does not mean that this persona is peaking, and just because he is the subject of a negative articledoes not mean that this persona is bottoming. To serve as such a signal, an event must truly be an extreme social assessment of value.I (Bob Prechter) made two forecasts on this basis. In 1992, Elaine Garzarelli's image was so attractive
that she began appearing on television in panty hose commercials. On January 31, 1992, I presented the following assessment of her persona:"Based on the typical progression, I would conclude that 1992 will witness the peak in her heroic public image, and the media will begin to shift focus toward some of her errors. It is thesame natural flow of social psychology that produces bull and bear markets."
Within a few months, the press savaged her money management results, and her firm let her go.Chapter 15 discussed the wave positioning of pop music superstars. Michael Jackson enjoyed a long superstardom, which led to an extreme event that signaled the reversal of his persona. Here is my assessment from March 29, 1991:
"It would be reasonable to assume that the astounding value of the contract that Mr.Jackson signed with Sony on March 19, as noted in the article that follows, is a sign of a peak in his valuation."
USA, today, March 21, 1991: "Jackson hits billion-dollar note" within a year of that event , Jackson's image began slipping. Reviews ofhis records became mixed to critical, and his sister ridiculed him in public. That was wave A down. Then came a wave B bounce, when Jackson performed for the Super Bowl halftime show in January 1993. By the end of the year, his image was collapsing in a powerful wave C. The list of indignities that year is stunning. He was accused of child molestation. An (TV shows) were alleging conduct suggestive of guilt. He was hospitalized with a drug problem. He had to cancel the remainder of a world tour. Two major companies terminated their commercial relationships with him. He was sued for millions by promoters for cutting short his tour. He was sued for millions by two songwriters who claimed he stole their material. A high profile university reneged on giving him a prestigous award. Police ordered pictures of his genitals to verify testimony, and it was rumored that they were being peddledto publications. Certainly, his behavior in those months, good or bad, had not changed, it was the public's focus that changed. Moreover, whether Jackson actually committed wrongdoing that warrants the collapse of his imageis irrelevant to the dynamic. Unlike most, the following newspaper comments actually stated his situaion quite accurately:
"The self-proclaimed king of pop has enjoyed a lucrative reign, but that kingdom is eroding and in danger of collapse. In rushing to exploit dubious evidence of wrongdoing (Jackson reading Child magazine, for instance) , the media seem oblivious to the concept of presumed innocence. Is this rush to judgement fair? Probably not, but you can't expect restraint when the stakes are so high and the drama so gripping. A beloved musical hero of children is a confessed drug addict and suspected child monster. A global icon may retreat from view forever. Guilty or not, Jackson is a tragedy unfolding. If the boy's story holds up, if a jury convicts him, we'll witness a fall from grace as indelible as Richard Nixon's. Both involve admired men empowered by the trust of millions. No Hollywood scandal compares."
Tom Cruise started out in pictures in the early 1980s when the bull market was getting underway. In 1983, as the Dow Jones Industrial Average said goodbye to the 1000 level, he leapt to fame by starring in the movie Risky Business. In the 1990s and the first half of the 2000s, his films grossed $2.5 billion for Paramount as the Dow climbed over 10,000.
On May 5, three days before the countertrend bear market rally peak in the S&P, Cruise was named
“The Most Powerful Actor In the World” by Premiere magazine. It’s was such a quick trip from that height to getting bounced by Paramount that heads a spinning in Hollywood.“So little makes sense this morning about the stunning war between Cruise and Paramount Pictures that it’s hard to know where to begin,” says Fox News. “I’m not sure why this happened,” Cruise partner Paula Wagner said. “It looks like bad business to me.” Paramount could have just released its biggest box office draw walk but the part that no one can believe is that Sumner Redstone, the grand daddy of entertainment executives, kicked Cruise on his way out the door. “It was graceless and it was shocking and offensive,” said Cruise’s agent. The treatment along with the larger message of a broader Hollywood crackdown and Cruise’s “metamorphosis from pure box-office phenomenon to pop-culture punch line” are sure signs of just how deep the social transformation EWI’s been tracking over the last several months is set.
Bush urplötzlich im Umfragehoch
Rund sieben Wochen vor den Kongresswahlen kann sich George W. Bush über
steigende Umfragewerte freuen. Allein in diesem Monat konnte der US-Präsident fünf Prozentpunkte gut machen. Die Welt online, 19.Sept.2006 Read more
Frühindikator
Börsenboom beschert Spitzen-Weinen PreisrekordeEdle Tropfen aus dem Bordelais verteuern sich um rund 300 Prozent. Als ein solcher Run auf die edlen Roten das letzte Mal zu beobachten war, standen die Aktienmärkte vor dem größten Abschwung der vergangenen Dekaden. (Die Welt online, 14.September 2006)
Berlin - Wenn die Preise großer Bordeauxweine einen Indikator für die Finanzmärkte abgeben, dann sollten Börsianer langsam etwas unruhig werden. Dieses Jahr sind die roten Spitzentropfen aus Südwestfrankreich nicht nur so teuer wie nie zuvor, vielmehr verzeichneten sie auch Preiszuwächse von durchschnittlich 55 Prozent zum Vorjahr. Als ein solcher Run auf die edlen Roten das letzte Mal zu beobachten war - nämlich vor fünf Jahren - standen die weltweiten Aktienmärkte vor dem größten Abschwung der vergangenen Dekaden.
"Oberflächlich betrachtet ist es diesmal genauso wie 2000 - eine jahrelange Hausse an den Börsen geht einher mit Höchstpreisen bei den französischen Spitzengewächsen", sagt Frank Schallenberger, Stratege bei der Landesbank Baden-Württemberg (LBBW) und Kenner des Weinmarkts. "Je höher weltweit die Aktienmärkte steigen, desto bereitwilliger stecken zu Wohlstand gekommene Finanzmarktakteure ihr Geld auch in edle Tropfen." Sei es zur Diversifizierung oder einfach deshalb, weil man sich die renommierten Bouteillen mit dem beeindruckenden Etikett jetzt leisten könne.
So schlägt eine Flasche Mouton Rothschild in der Subskription (also im Vorausverkauf ab Weingut) derzeit mit rund 500 Euro zu Buche. Der Jahrgang 2004 war in der Subskription noch für rund 130 Euro zu haben. Das berühmte Château ist alles andere als ein Einzelfall. Auch andere renommierte Weingüter konnten dieses Jahr exorbitante Preissteigerungen von bis zu 329 Prozent durchsetzen. Die Gründe für die hochschnellenden Preise sind vielfältig: "Der Jahrgang 2005 dürfte einer der besten der vergangenen Jahrzehnte sein", kommentiert Armin Diel, Herausgeber des maßgeblichen deutschen Weinführers "WeinGuide". Auch andere Kenner des Weinmarkts sprechen von einem außergewöhnlichen Jahrgang. Der extrem einflussreiche amerikanische Weinkritiker Robert Parker ist für den 2005er mit Höchstnoten so freigebig wie selten. Doch die durch eine Kombination vorteilhaften Wetters (trockener Sommer, schöner Herbst) zustande gekommene Güte des 2005ers ist nicht der einzige Grund: "Neue Kundenkreise aus Fernost sind dabei, Wein mehr und mehr als Luxusgut zu entdecken", sagt Diel. Dafür seien die edlen Tropfen aus Südwestfrankreich besonders geeignet, da diese als Kultobjekte weltweites Prestige genössen.
Für Schallenberger hat die Explosion der Bordeaux-Preise mit dem Börsenboom zu tun: "Wenn Nikkei, Dow Jones und Dax noch auf den gleichen niedrigen Niveaus herumkrauchen würden wie 2003, wären derartige Spitzenpreise auch für einen sehr guten Jahrgang wie 2005 kein Thema", so der Stratege, "das nötige Kleingeld muss erst mal da sein."
Beobachter fragen indessen, wie viel Spekulation in den jetzigen Auswüchsen - ähnlich wie beim Aktien- und Rohstoffmarkt - steckt. Zwar verzehnfachten sich ältere Jahrgänge von Spitzenweinen aus dem Bordelais (Premier Crus) in den zurückliegenden 15 Jahren im Wert. Jedoch stellt sich die Frage, ob der Bogen nicht bereits überspannt ist. Viele Kenner der Materie halten einen späteren Absturz der Preise für möglich, falls sich der erst 2008 zur Auslieferung anstehende 2005er in der Flasche nicht so gut entwickelt wie erwartet oder den Wohlhabenden die Trinklust bis dahin vergeht. Auch Diel ist skeptisch, ob es sich lohnt, auf diesem Niveau noch auf spekulative Gewinne zu setzen: "Angesichts der gepfefferten Preise sollten reine Spekulanten vielleicht besser die Finger davon lassen."
Die Welt, 14.9.2006
Psychological aspects
Though many participate in gambling as a form of recreation or even as a means to gain an income, gambling, like any behavior which involves variation in brain chemistry, can become a psychologically addictive and harmful behavior in some people. Reinforcement phenomena may also make gamblers persist in gambling even after repeated losses. Because of the negative connotations of the word "gambling", casinos and race tracks often use the euphemism "gaming" to describe the recreational gambling activities they offer.
The Russian writer Dostoevsky portrays in his novella The Gambler the psychological implications of gambling and how gambling can affect gamblers. He also associates gambling and the idea of "getting rich quick", suggesting that Russians may have a particular affinity for gambling. Dostoevsky shows the effect of betting money for the chance of gaining more in 19th-century Europe. The association between Russians and gambling has fed legends of the origins of Russian roulette. Source: wikipedia
MTV-Awards
Die Welt, 1.September 2006
Punkrocker siegen über Madonna und Shakira
Das Punk-Quartett Panic! at the Disco hat in der Nacht zum Freitag bei der Verleihung der MTV-Videomusikpreise in New York für „I Write Sins Not Tragedies“ den Ehrentitel „Video des Jahres“ gewonnen. Große Verliererinnen waren Shakira und Madonna.
Read more
Heroes
January 11, 2007
Beginning of End for Beckham?England's international star faces fade to obscurity with leap to MLS
LONDON - After playing alongside Ronaldo and Zinedine Zidane in Real Madrid’s star-studded lineup, David Beckham will be the biggest star in Major League Soccer when he joins the Los Angeles Galaxy in August.Signing a five-year deal reportedly worth about $250 million, the former England captain will wear the Galaxy’s green and gold shirts after having worn the red of Manchester United and the white of Europe’s most successful club, Real Madrid. But is this a new beginning or the highly lucrative end of a career that was going stale?
In a Hollywood stunner, Paramount says megastar Tom Cruise is "risky business," so they're cutting ties with the actor. (topix.net) Top Gun shot down at Paramount Parent company's chairman Sumner Redstone says Tom Cruise's 'recent conduct has not been acceptable'" Top Gun shot down at Paramount Montreal's film fest keeps going and going Sci Fi channel shuts door on ... TOM Cruise has been dropped by Hollywood bosses after a year of crazy media stunts which have lead to what media professionals are calling 'creative suicide'. Cruises recent bizarre behaviour has ...
In 1990, 1991 and 1997, People magazine rated him among the 50 most beautiful people in the world.in 1995, Empire magazine ranked him among the 100 sexiest stars in film history.Two years later, it ranked him among the top 5 movie stars of all time. In 2002 and 2003, he was rated by Premiere among the top 20 in its annual Power 100 listIn 2006, Premiere magazine established Cruise as Hollywood's most powerful actor, as Cruise came in at number 13 on the magazines 2006 Power List, being the highest ranked actor.On 16 June, 2006, Forbes magazine published 'The Celebrity 100', a list of the most powerful celebrities, in which Cruise came top. The list was generated using a combination of income (between June 2005 and June 2006), web references by Google, press clips compiled by LexisNexis, television and radio mentions (by Factiva), and the number of times a celebrity appeared on the cover of 26 major consumer magazines. As of August 2006, "a USA Today/Gallup poll in which half of those surveyed registered an "unfavorable" opinion of the actor" was cited as a reason in addition to "unacceptable behavior" for Paramount's non-renewal of their production contract with Tom.
"Mission Wall Street" (Die Welt)
"Nach dem Rausschmiss: Die Trennung von Paramount und Tom Cruise könnte beispielhaft für den Weg Hollywoods sein." Auf dem Höhepunkt seines Marktwertes: Tom Cruise in "Mission Impossible II" Erklären die Hollywood-Studios, aufgehetzt von der Wall Street, ihren Stars den Krieg? Beging Sumner Redstone, Konzernchef der Viacom-Tochter Paramount, rituellen Selbstmord oder opferte er sich für die Befreiung der versklavten Studios? Begeht Tom Cruise Harakiri mit "Scientology: The Movie" oder beschließt er, noch furchtbarer, in die Politik zu gehen? Gibt es Suri Cruise wirklich, die vor vier Monaten angeblich geborene, nie gesehene Tochter von TomKat alias Tom Cruise und Katie Holmes, oder ist sie ein Alien? Fragen über Fragen. Vier Tage nach der feindseligen Trennung von Redstone (83) und Cruise (44) verkündet Redstone den Sieg und Cruise lässt Schockiertheit ausrichten angesichts der niederträchtigen Ehrlichkeit in einer Branche, die für makellos verlogene Umgangsformen bekannt ist. Die Klatschpresse wendet sich freudig Suri und anderen wichtigen TomKat-Exegesen zu. Aber Hollywood windet sich in Selbst- zweifeln.
Nackt verkauft nicht
(Der Spiegel Nr.19/2006, 8.5.2006)
Nur mit nackter Haut, Luxus und schnellen Autos lassen sich Magazine offenkundig immer schwerer verkaufen: Die einschlägigen Männermagazine weisen fast alle einen anhaltenden Abwärtstrend bei ihren Verkaufszahlen auf. "FHM" aus dem Verlag Attic Futura etwa sackte in den vergangenen Jahren von einst deutlich über 200 000 verkauften Heften auf nur noch gut 160 000 Exemplare im vergangenen Quartal. Ebenfalls unter Druck steht "Maxim" (Springer). Das Blatt fuhr seine Sonderverkäufe stark zurück und verlor auch deswegen seit dem ersten Quartal 2003 rund 40 Prozent seiner Verkaufsauflage. Auch "Matador", das neue Männermagazin aus dem Hamburger Bauer Verlag , verlor seit 2005 beständig die Auflage. Der Klassiker "Playboy" (Burda-Verlag) dagegen konnte sich einigermaßen behaupten - allerdings mit stark schwankenden Verkäufen von rund 70 000 Heften im Vergleich zum jeweiligenVorquartal. Read moreA waxing negative social mood appears to correlate with an interest in sex over love. (The Elliott Wave Principle of Human Social Behavior)
Popular Cultural Trends as Manifestations of Social Mood Trends
If stock market trends reflect social mood trends, the emotions associated with those
trends must have other manifestations. An examination of the major eras of social mood expressions where data is available show that they do, as popular cultural trends peak and trough coincidentally with the stock market in their joint reflection of the popular mood. (HSB, p.237)
Record Labels Are Shedding Big Names
Star singers and musicians are increasingly being dumped from their record labels. Rod Steward, David Bowie, Tori Amos, Sinead O'Connor and Anita Baker are among established artists who have found that they do not sell enough records to justify the overhead. (Financial Times, December 24, 2001)
A favorite quote of ours is Plato's cautionary note about changes in musical styles from Book IV of The Rebulic. Here's another interesting translation we've come across recently: "The methods of music cannot be stirred up without great upheavels of social custom and law." Two more versions on page 255 of The Wave Principle of Human Social Behavior' offer that when the modes of music change "the laws of the state change with them" and "the walls of city shake." Reeding deaper into Plato's account, we find that, like most modern-commentators, it inaccurately assumes a causal link. "(A new) form of play makes itself at home little by little, and gently overlows upon manners and practice; from these now stronger grown, it passes to men's business agreements; and from business it moves upon laws and constitutions in a wanton flood, until at last all public and private life is overwhelmed. Of course, Plato had an excus. He did not have the stock market, which The Elliott Wave Theorist has indentified as the most precise recording of social mood and thus the most important tool of socionomic research.
Looking back across the long stock market topping process, the same "little by little" change Plato witnessed in ancient times can be seen overflowing "upon the manners and practices" of the music industry. The transition has been going since at least 1998, when the New Music Express, a well established music industry trade publication, produced an eight-page report saying that the business appeared to be "in the early throes of a depression which could be terminal." A London Times music writer inadvertently identified the approaching "meltdown" as a bear market when he said it resembled its status in "the pre-punk 1970s," the disco bust of the early 1980s and "the early 1990s when sales were static and everything from computer games to comedians were being touted as "the new rock'n roll." All three periods featured coincident declines in stock prices. The music industry steadied itself through 2000, but 2001 brought unmistable evidence of decline. The most obvious is a sales decline that left the record industry with its "worst performance in at least a decade."
The latest crater came on January 24, 2001, when Mariah Carey's $100 million contract was terminated. Carey was dumped when her latest album sold 501,000 copies. Glitter was "the first bomb in a dazzling career" that began in 1991, the start of the last leg of the bull market.
Late in the year, musical icons Mick Jagger and Paul McCartney put out albums that have already disappeared from the charts. The two biggest sellers of Cycle Wave V, Garth Brooks and Michael Jackson, also put forward albums that fell almost immediately from the Top 10. Back in 1989, EWT identified Jackson as the pop music idol of Cycle V. He earned the title on the strength of a string of mega hits in the 1980s. But like many wave V cultural manifestations and music in general, Jackson has been losing momentum for years. In fact, he peaked with Thriller, which came out a few months after the start of the bull market in 1982 and went on to sell 52 million copies, the most in history. On November 13, in the middle of what may well be the Dow's last failed bit for its final highs, Jackson experienced his own last hurrah with a 30th Anniversary show. The TV special was
the highest rated network concert in six years (The show that Jackson could not beat out was The Beatles Anthology featering the Cycle III musical heroes). At the same time, Jackson's comeback album Invincible opened at the top of the Billboard 200. But then it slid to No.3, right behind a greatest hits album from Pink Floyd, a bear market band EWT has previously identified as the "strongest-selling group in 'downer theme' history". Another sign of the emerging downturn was the reception that the album received in the media. Critics saveaged the release as "Bizarre", "Invincibly Awful" and "Downright Creepy."
A shorter signal is being given by the suddenly failing fortunes of teen pop sensations like
"N Sync, Britney Spears, the Backstreet Boys and Christina Aguilera. All are off the fast pace of recent years. In November, for instance, Britney's new album opened at No.1 on the charts with sales of 746,000, far short of her last album's opening tally of 1.3 million in May 2000 and 'N Sync's July total of 1.8 million. As one headline notes, "Teen Pop's On the Way Out." Like the Beatles in 1965-1969, Spears is now engaging in a desperate bid to turn with the tide. Her version of the Beatles' persona-shifting Lonely Hearts Club Band in 1967 will take full form in her first movie, which comes out later this month. The film features sex, rape, underage drinking and teen pregnancy."It's a far cry from the Miss Priss image Spears has tried to cultivate," says the NY Post. "The flick features the sultry song-bird dancing in her underwear, getting drunk and losing her virginity to an ex-con."
Meanwhile, the bulleted albums on the Billboard 200 reveal an emerging demand for darker fare. Among surprises in recent months is The Great Depression, The Sickness and Iowa by a band called Slipknot that has "risen out of obscurity" with the help of a "dark grinding sound" and "grotesque masks." This progression from bubble gum at the highs to grinding guitars and dark lyrics is a replay of the transition from 1965- 1969 as described in EWT's 1985 report, "Popular Culture and the Stock Market." During that peak, the old uptrend , characterized by "studio manufactured 'Bubble Gum' hits, a sickly-sweet extreme in trend," compted with the emerging bear market, which supported "bands whose accent was on the negative, (with a) noisy, foreboding sound." As the second major leg of Cycle wave IV got rolling in 1969, bubble gum made a quick exit. This era's lingering teen sensations should now do the same. Spears' slackening sales and makeovers suggest that that is exactly why is happening. Time magazine reports that a "rap-metal fusion" album by Linkin Park" shocked the record industry by selling 4.8 million copies of its debut album to eclipse 'N Sync and Britney Spears as the top selling act of 2001. "The band's themes of "alienation, frustration and loneliness" seem made to order for a post-bubble and a post-bubble gum world. A lot of the band's lyrics could be titled Ode to the NASDAQ: "I tried so hard and got so far/but in the end it doesn't even matter."
Trends in Popular Music Expression
As a 78-rpm record collector put it in a Wall Street Journal article, music reflects "every fiber of life" in th eU.S. Accordingly, its themes and tones have been virtually in lock step with social mood as reflected by the major trends in the Dow Jones Industrial Average. In the 1950s and early 1960s, as a great bull market was underway, major pop music stars were young and energetic; and their lyrical theme was, "I feel good and I love you."
By the end of the decade, paisley-clad popsters in the Summe rof Love sang in esssence, "OH, wow, I feel great and I love everybody." The excerpts below give you a flavor of the lyrics o fhit songs near th epeak:"Life, I love you. All is groovy." (1966)
"Scuse me while I kiss the sky." (1967)
"All you need is Love. Love is all you need." (1967)
"Put a little love in your heart, and the world will be a better place
for you and me, just wait and see."(1969)
The reversal of trend at the peak of the bull market brought such a dramatic change in the
character of the music from upbeat to downbeat themes and tone that a #1 song on the subject from 1971 lamented, "Something touched me deep inside the day the music died." As the deepest bear market since the early 1940s got underway, pop music stars became socially concerned, world-weary, angry and cynical, and their lyrical theme changed to, "I'm depressed, and you're no good." At the end of the decade, punk rockers communicated in violent fashion an amorphus, tortured, "I'm in agony and I hate everybody." Read more
JUGENDSTUDIE
"Die Angst sitzt uns in den Knochen"
Jugendliche treiben Sorgen über ihre Zukunft um - das lesen Forscher aus der neuen Shell-Jugendstudie heraus. Aus Furcht vor Arbeitslosigkeit entwickeln Mädchen demnach großen Ehrgeiz, während Jungs sich möglichst lange im "Hotel Mama" einigeln. Der Spiegel online, 21.9.2006 Read more
Landesregierung sieht Love-Parade vor dem Aus
Berlin (AFP) - Die für den 9. Juli in Berlin geplante Love Parade steht nach Einschätzung der rot-roten
Landesregierung vor dem Aus. "Die Love Parade ist mausetot", sagte der Berliner PDS-Chef Stefan
Liebich dem "Berliner Kurier". "Die Veranstalter haben es nicht verstanden, ihr Konzept
weiterzuentwickeln." Wirtschaftssenator Harald Wolf (PDS) sagte: "Das Land Berlin kann keinen
Euro beisteuern, weil die Love Parade keine öffentliche Veranstaltung ist."
"Ob die privaten Veranstalter noch etwas auf den Weg bekommen, ist im Moment nicht erkennbar",
sagte Wolf. SPD-Landes- und Fraktionschef Michael Müller fügte hinzu: "Nur Rave-Musik der 90er Jahre
- das ist inzwischen zu dünn, um Großsponsoren zu gewinnen."
Zuletzt war der Elektronikkonzern Samsung als Sponsor des Techno-Events abgesprungen.
Die Veranstalter brauchen insgesamt 500.000 Euro und wollen nach Angaben des Blattes
wahrscheinlich noch an diesem Freitag an die Presse gehen. Bereits im Vorjahr war die
Veranstaltung wegen fehlender zahlungskräftiger Sponsoren abgesagt worden.
The Wave Principle of Human Social Behavior
And The New Science of Socionomics
by Robert R.Prechter, 1999
The Science of History and Social Prediction Best-selling author Robert Prechter’s revolutionary two-book set, Socionomics: The Science of History and Social Prediction spells out a historical correlation between patterned shifts in social mood and their most sensitive register, the stock market.It also presents engaging essays -- representing over 20 years worth of research -- correlating social mood trends to music, sports, corporate culture, peace, war and macroeconomic trends.
More about Socionomics
