The 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.
CHAPTER 1 Psychology: A Primer 7
Some Key Psychological Concepts 9
The Unconscious 13
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
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
Mass Hysteria and Panics 62
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
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
CHAPTER 6 Developing a Conceptual Measurement Methodology Based on Archetypal Forces, Part I: Building Blocks 93
Linking Symbols to Archetypes 96
Capturing Symbols 98
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
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
CHAPTER 9 Examples of Archetypal Influences on the Formation of Financial Bubbles 145
The Dot-Com Bubble 148
The US Property Bubble 155
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
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.
Investors are often unaware of the real reasons behind their own financial decisions. Throughout history, financial bubbles have periodically wrecked havoc on the world economic stage and conventional economic models have failed to predict how erratic behavior influences the marketplace. However, according to one expert, our behavior and judgment is affected by some key psychological concepts without us realizing it.
“There has long been a notion that psychological forces play a great part in causing the financial bubbles, which conventional economic theory fails to explain,” author Niklas Hageback observes. Although a superficial recognition of these forces exists whether labeled as Animal Spirits or Mr Market, no attempts have been made to systematically measure them and use them as precursor to shifts in the market sentiments.”
In his new book, The Mystery of Market Movements: An Archetypal Approach to Investment Forecasting and Modelling (Wiley; April 2014; ISBN: 978-1-118-84498-4), Hageback explores the collective unconscious and its archetypes, innate thought patterns shared among mankind based on Swiss psychiatrist Carl Gustav Jung’s theories, and introduces a practical method through various use of symbolic language that relates to specific archetypes.
Using real-time data and financial market indices, the method introduced in this book measures and maps the metaphorical expressions which represent the zeitgeist (the spirit of a particular age) formed by the collective unconscious, illustrating why they exist; why they change over time; and how they can be measured. Through this methodological framework that recognizes and captures the influences of Jungian archetypes via a big data approach, the author aims to help investors recognize the investment opportunities they create.
Investors looking to stay ahead of the curve will learn how to forecast major shifts in market trends and profit from them, which traditional methods completely overlook.
Key features of The Mystery of Market Movements include:
- An overview of the collective unconscious and its archetypes written in jargon-free language.
- Explains why psychological drivers in the collective unconscious dictate not only investment behaviour but also political, cultural and social trends.
- Reveals data sources including samples of how the symbol selection is conducted to give investors a chance to understand how archetypes drive the financial markets.
The book is supplemented with an online resource that offers access to information necessary for understanding the current archetypal influences in the marketplace. The site can be accessed at www.forecastrix.com.
The Mystery of Market Movements can be purchased at US$70.00 directly from the publisher by ordering online at www.wiley.com/go/mysteryofmarketmovements. The book is also being distributed to major bookstores nationwide, as well as major online retailers.
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