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Social mood, markets and history
Hidden in plain sight
I've gotten huge benefit form being aware of the Elliott Wave Theory.
On the one hand, Elliott Wave is a trading philosophy, but the theory is useful for many more things.
1. The media is always late in its analysis. Politicians are always incredibly rate. If they are focusing on it, it's too late.
2. Social mood changes in waves from Disbelief to Belief to Super-Belief and then crashes and then repeats the cycle.
3. Social mood drives the economy. The economy does not drive social mood.
4. Social moods move in five waves
Example of a Five Wave Cycle as it applies to belief in the stock marketing:
1930s - Bottom of disbelief with slow positive build - Wave 1
1940s - Retracement - Wave 2
1950s - 1960s- Belief (but not wild-eyed belief) - Wave 3
1970s - Retracement - Wave 4
1980s to 2008 - Super-Belief - Wave 5
5. Cycles can last as short as a few minutes or as long as several hundred years.
6. We are heading for a major crash, one so deep people will return to a 1930s mentality - deflation, vastly reduced speculation, stock market unpopular, real estate as an investment unpopular - which, of course, will be the time most people won't buy and therefore the best time to buy.
7. We peaked out in the first decade of the 21st century and this was the top of a 200+ year bull market (Grand Super Cycle)
The bottom is expected in 2016.
Sound wild? Look into it.
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