Short Skirts and Bear Markets: An Interview with Stock Market Analyst Robert Prechter

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Short Skirts and Bear Markets: An Interview with Stock Market Analyst Robert Prechter

"At some point I think we are going to see people hate stocks and say they will never buy a plot of land again for the rest of their lives," says author and stock market analyst Robert Prechter, "and it will be one of the greatest buying opportunities of all time."

Reason magazine's Matt Welch sat down with Prechter at FreedomFest 2012 to discuss the stock market, socionomics, and how hemlines can explain and predict economic booms and busts.

Held each July in Las Vegas, FreedomFest is attended by around 2,000 limited-government enthusiasts and libertarians a year. ReasonTV spoke with over two dozen speakers and attendees and will be releasing interviews over the coming weeks. For an ever-growing playlist, go here now: 

http://www.youtube.com/playlist?list=PL1ECFFDA94AA8AA05

About 10 minutes.

Camera by Tracy Oppenheimer and Alex Manning; edited by Sharif Matar.

Comments

[darius404]

His talk about mood cycles makes me wonder what he'd think about a connection between mood cycles and the boom/bust cycle. The way he describes it seems very reminiscent of the boom/bust cycle.

[sage]

Love the beard, Matt. You need to go Spartan style with that thing.

[Cool Story, Bro]

For a second there, I thought I was looking at a picture of Phil Spector.

[Sam Grove]

So, from a sociological perspective, he found that booms are followed by busts.

[darius404]

Yeah, that's what I got from it as well. At first, I was a bit skeptical from the way he described it. But the more I listened the more familiar it sounded. I think it's interesting that he's arriving at similar ideas from a sociological perspective rather than an economic perspective though.

[darius404]

Well, more from a partial merging of the sociological and economic perspectives, anyway. Though his work isn't limited to financial trends.

The Socionomics Institute defines socionomics as "a field of study deriving from the hypothesis that social mood motivates the character of social action."

http://www.socionomics.net/lea.....cionomics/

[darius404]

Socionomics reminds me of praxaeology, in that both look at human action being influenced by the motivations involved, and neither of them seem to make much of a distinction between the social and the economic.

[Palin's Buttplug]

Prechter has long been a Perma-Doomer not even fit for the idiots at ZeroHead.

[darius404]

Ah yes, believing that there are ups and downs to society is totally "perma-doom". At LEAST make up something more believable, that doesn't directly contradict what the guy actually says.

[CoralChains]

I wish peace would break out sometime soon...

[Delroy]

I'm a bit behind on this discussion, but my impression is that he basicaly said that economic ups/downs follow ups/downs in mood. But I don't think a positive mood can offset bad financial/policy decisions.

Look at Obama's 2008 election. Many people were in a good mood about it. Hell, they gave him a Nobel Peace Prize because they felt so good about his election. But four years later, the economy is still in the crapper - especially for the Europeans who fell in love with Obama's election. Their economic policies/decisions can't be offset by a positive mood.

I honestly don't understand the part about how the relationship is fractal-based (vs. a linear relationship), but to me it comes across as an easy excuse for situations like I describe above. If you can't really show a correlation, then how can you show a causation? If the relationship has an arbitrary aspect to it, then is it really a relationship?

I think there are boom/bust cycles as others have commented. Also, moods change. But you can't really come up with boom/bust predictor (with any accuracy) based on mood.

I think he predicted that there will be an economic boom sometime in the next 10 years. Do you really need to do a fractal analysis of moods to come up with that?

[darius404]

If you can't really show a correlation,

He didn't say that. What he said was that the trends don't track to one set amount of time.

[Delroy]

So, the trend will change "eventually"? Um, who can't make that prediction?

I currently predict that the unemployment rate will eventually go down for a while. Then it will eventually after that go back up for a while. Hey, I'm an economist!

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