danger of societal mood shift in negative ways

[Julie Hotard]

Hi, Folks

Below is some info from a stock market newsletter I receive, about a possible upcoming mood shift toward anger, fear, intolerance and exclusion in American society and possibly other societies as well.  The theorist is well known and respected and often but not always correct.  Although he is predicting these things as though they are likely to happen no matter what, I think that they are just one possibility, due to the effects on society's mood from the war against terrorism and the Bear market.  I think the more aware we are of the dangers of a societal mood shift in these directions, the more chance we have to "head it off at the pass" and stop these things from occurring, or at least begin to heal and change these things if they do occur.  Would be interested in ideas from folks here on how to do either of these things-- stop this mood shift and/or heal and change it constructively. 

Robert Prechter, whose Elliott Wave Theorist Letter is highly respected, provides an analysis of social trends and mood changes.  The Elliott Wave Theory basically subscribes to the idea that investment trends and economic trends are produced by mood changes on the part of investors or people. These mood changes precede changes in the markets or the economy. It's not the other way around.  His book: "The Wave Principal of Human Social Behavior and the New Science of Socionomics" has the thesis that changes in social mood cause and therefore precede changes in the character of social events. For more information and reading on this very interesting subject, go to www.elliottwave.com.

In 1995, Robert Prechter wrote:

"The coming trend of negative social psychology will be characterized primarily by polarization between and among various perceived groups, whether political, ideological, religious, geographical, racial or economic. The result will be a net trend toward anger, fear, intolerance, disagreement and exclusion, as opposed to the bull market years, whose net trend has been toward benevolence, confidence, tolerance, agreement and inclusion. Such a sentiment change typically brings conflict in many forms, and evidence of it will be visible in all types of social organizations. Political manifestation will include protectionism in trade matters, a polarized and vocal electorate, separatist movements, xenophobia, citizen-government clashes, the dissolution of old alliances and parties, and the emergence of a radical new one.

Xenophobia will be practiced regardless of people's generally good intentions, because fear and hatred become pervasive in major bear markets regardless of whether or not they are justified.  There will also the a danger that governments will impose police state-type controls as a consequence of the bear market."

But investors need not put their heads in the sand like an ostrich, as there will be terrific opportunities. In fact, one could be right around the corner. A bear market in the NASDAQ which started early last year gave us some good rallies in between. They were tradable and you could have made profits of 50% or more in specific issues during those rallies.

Now if we believe that we are in the early stages of a long decline in the market, it stands to reason that such bear market rallies will be even more powerful, and will last longer. In fact, many people will call them a new bull market until they finally fail to exceed the prior high and the market retreats again. And during such upmoves, big profits will be made by those who are ready and able to participate. During the next declining phase, which may last many months, great profits can be made by short selling.

At the end of Bob Prechter's latest newsletter, he offers his book (mentioned above) at half-price, just to get the message out. I know that at that price the publisher does not make any profit. I know Bob is a highly intelligent and highly ethical person. Take him up on the offer.

BTW, both this and the piece reprinted from another source re:what to do in a hijacking, were from the same stock market newsletter, which also has very good guidance on stock market trends.  I'm not going to advertise it here, but if anyone is interested in hearing about it, please e-mail me privately at julie at pinefish.com  

Julie

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