A quantifiable framework for unlocking the unconscious forces that shape markets There has long been a notion that subliminal forces play a great part in causing the seemingly irrational financial bubbles, which conventional economic theory, again and again, fails to explain. However, these forces, sometimes labeled 'animal spirits' or 'irrational exuberance, have remained elusive - until now. The Mystery of Market Movements provides you with a methodology to timely predict and profit from changes in human investment behaviour based on the workings of the collective unconscious. Niklas Hageback draws in on one of psychology's most influential ideas - archetypes - to explain how they form investor's perceptions and can be predicted and turned into profit. The Mystery of Market Movements provides; A review of the collective unconscious and its archetypes based on Carl Jung's theories and empirical case studies that highlights and assesses the influences of the collective unconscious on financial bubbles and zeitgeists For the first time being able to objectively measure the impact of archetypal forces on human thoughts and behaviour with a view to provide early warning signals on major turns in the markets. This is done through a step-by-step guide on how to develop a measurement methodology based on an analysis of the language of the unconscious; figurative speech such as metaphors and symbolism, drawn out and deciphered from Big Data sources, allowing for quantification into time series The book is supplemented with an online resource that presents continuously updated bespoken archetypal indexes with predictive capabilities to major financial indexes Investors are often unaware of the real reasons behind their own financial decisions. This book explains why psychological drivers in the collective unconscious dictates not only investment behaviour but also political, cultural and social trends. Understanding these forces allows you to stay ahead of the curve and profit from market tendencies that more traditional methods completely overlook.
Acknowledgments ix Introduction 1 CHAPTER 1 Psychology: A Primer 7 Some Key Psychological Concepts 9 The Unconscious 13 Conclusion 21 Notes 22 References 24 CHAPTER 2 Archetypes and Symbols 27 Carl Gustav Jung 27 Archetypes: A Background 31 Why Do Archetypes Activate? 40 Symbols: The Tangible Manifestations of Archetypes 45 Conclusion 50 Notes 50 References 52 CHAPTER 3 How Archetypes Influence and Impact Behaviour 55 Characteristics of the Activation of an Archetype 55 Projections and Other Defense Mechanisms 56 The Role of Scapegoats 58 Shadow Projections 58 Zeitgeist 59 Mass Hysteria and Panics 62 Conclusion 65 Notes 65 References 66 CHAPTER 4 Archetypal Influences in the Financial Markets 67 Financial Bubbles 67 Animal Spirits 71 An Archetypal Perspective on the Development of Financial Bubbles 74 Conclusion 77 Notes 77 References 78 CHAPTER 5 Existing Approaches to Capture Sentiments in Financial Markets, and Why They Do Not Work 81 Behavioural Finance 82 Technical Analysis 83 Efficient Market Hypothesis 84 Black Swans 86 Social Mood 87 Emotion Words 89 Conclusion 89 Notes 90 References 91 CHAPTER 6 Developing a Conceptual Measurement Methodology Based on Archetypal Forces, Part I: Building Blocks 93 Linking Symbols to Archetypes 96 Capturing Symbols 98 Conclusion 107 Notes 108 References 109 CHAPTER 7 Developing a Conceptual Measurement Methodology Based on Archetypal Forces, Part II: The Data 111 Data Sources 112 Capture and Cleansing 114 Relativisation of Symbol Words 119 Two Article Examples 120 Conclusion 128 Notes 128 References 129 CHAPTER 8 Developing a Conceptual Measurement Methodology Based on Archetypal Forces, Part III: The Model 131 Signal Theory 133 Correlation Testing 136 Testing the Time Series against Known Cycles 138 Constructing Archetypal Composite Indexes 138 Backtesting and Calibration 141 Conclusion 142 Notes 143 References 143 CHAPTER 9 Examples of Archetypal Influences on the Formation of Financial Bubbles 145 The Dot-Com Bubble 148 The US Property Bubble 155 Conclusion 159 Notes 160 References 161 CHAPTER 10 Conclusion 163 How Archetypes Play Out 164 Areas for Further Research 165 Time Constants 166 Multiple Archetypes 166 Tipping Points 167 Subliminal Stimulation 168 Archetypal Influences in Other Areas 169 Archetypal Influences in Other Cultures and Languages 170 Are the Collective Unconscious and Its Archetypes Constraining Free Will? 171 Influences on Finance 172 About the Author 175 Index 177
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