Mystery of Market Movements - An Archetypal Approach to Investment Forecasting and Modelling

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.

List of contents

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

About the author

NIKLAS HAGEBACK has extensive experience in the financial sector working at tier-one financial institutions and consulting firms, such as Deutsche Bank, KPMG, and Goldman Sachs, holding regional risk management and oversight roles in both Europe and Asia. This included leading the implementation of operational risk and economic capital frameworks and also engaging in the public debate through a number of articles published, public presentations and regulatory lobbying.
He currently resides in Hong Kong where he is running a money management firm as well as managing a portfolio of financial software start-up firms with a special focus on research and product development in the area of behavioural finance.

Summary

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.

Product details

• Authors: Niklas Hageback, Hageback Niklas
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 30.05.2014
• EAN: 9781118844984
• ISBN: 978-1-118-84498-4
• No. of pages: 192
• Series: Bloomberg; Bloomberg Professional; Bloomberg Financial; Bloomberg Professional; Bloomberg Financial; Bloomberg
• Subjects: Social sciences, law, business > Business > Business administration; Kapitalanlage, Finance & Investments, Finanz- u. Anlagewesen, Kapitalanlagen u. Wertpapiere, Investments & Securities