Why Stock Markets May Be Lagging Indicators
from Asia Confidential
http://www.zerohedge.com/contributed/20 ... indicators
"Socionomics suggests social mood - what happens in society as expressed in the arts, music, mores, fashion and so on - drives stock markets which in turn drives economies. Put another way, what happens in society is a lead indicator for market price action. This theory turns conventional wisdom - purporting that economies drive stock markets and social mood - on its head."
"The assumption behind these discussions is that economies drives stock markets, or conversely that stock markets lead economies. These things are drilled into MBA students and throughout the financial profession."
"Socionomics says these discussion miss a key element. In fact, that the cause and effect implied is all wrong. The theory says that social mood drives human action, which drives stock markets, economies and much more. If people are feeling increasingly optimistic, they'll increase their productivity, which results in improved GDP. They'll also be more inclined to invest money in risk assets such as stock markets. In other words, social mood is a lead indicator for market risk appetite."
"happy people make for happy bedrooms" ------- comment ------- how many countries have demographic issues -- fewer young people and children? and what are those countries general economic trends?
"And in our neighbourhood of Asia, I've mentioned the depressing social mood in India, well before the recent currency crisis. In China, disgust at Communist Party corruption and the ostentatious display of wealth by party officials and businessmen has been apparent for several years. And it may explain the terrible performance of China's stock market, still down more than 60% from the 2007 peak."
comment ---------------- Why has there been so much manipulation of statics by governments? Such as HOW they figure the unemployment rate, the GDP, the inflation rate, etc.? -- to change the mood of the people?
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A personal observation, ---- over the years I have spent time in US art galleries, where original art is sold and priced from under a thousand dollars to over two hundred thousand dollars. I have asked on numerous occasions how is business, and have been told recently and repeatedly business is down. Since when? Since 2008. ----- comment ---- what happened in 2008? -- the idea of "you did not build that". ---Question. Who generally buys high priced art? Who generally expands business by hiring and capital improvements? Who is the major creator of new jobs?--- What was the initial reaction to the idea of "you did not build that" by the ones who build? ---- hmmmm, Going Galt? --- socionomics?