Bear Market Mov(i)es

Given my recent interest in 3D - my post on 3DTV from CES and the one on Investing in Media posted around the Academy Awards - it should come as no surprise that one of the more interesting things I learned studying wave theory is how popular culture matches the stock market (or maybe it is the other way around). We have all heard how skirts get short in bull markets ('20s, '60s, '90s) and long in bears, but did we know that cars get angular (and mean looking) in bull markets, and curvy and aerodynamic in bears? Or that the bands that are bull market favorites tend to break up or fall out of favor in bear markets? (Think: Beatles broke up in '70, and how the '80s phenom Michael Jackson devolved into a freak show. More on this concept here.) 

Movies are no exception. Indeed, music, film and fashion tend to be the closest match to markets, as they all exhibit the general social mood, and music in particular is extremely responsive to it. As we ended the grerat bull from 1949 to 1966, think of how the '70s had a plethora of horror films (Exorcist, Texas Chainsaw Massacre, etc.), or how aliens in bull markets tend to be misunderstood (ET, Close Encounters) while in bear markets are scary. I once did a look at the many versions of War of the Worlds to see how the stories reflected the fears of the times - the most recent remake, for example, came right after 9/11 and the aliens represented that sudden shock from within. 

Let me offer to you an article from EWI. As an affiliate, I get sent lots of articles to post, and since you can find them elsewhere, have tended to skip re-marketing them. This one, however, is all about movies and popular culture, and comes with a 50 page report as a free download. 

Highly Recommended. More below the fold. 

What Can Movies Tell You About the Stock Market?
March 15, 2010

By Editorial Staff

The following article is adapted from a special report on "Popular Culture and the Stock Market" published by Robert Prechter, founder and CEO of the technical analysis and research firm Elliott Wave International. Although originally published in 1985, "Popular Culture and the Stock Market" is so timeless and relevant that USA Today covered its insights in a recent Nov. 2009 article. For the rest of this revealing 50-page report, download it for free here.

This year's Academy Awards gave us movies about war (The Hurt Locker), football (The Blind Side), country music (Crazy Heart) and going native (Avatar), but nowhere did we see a horror movie nominated. In fact, it looks like Sweeney Todd, The Demon Barber of Fleet Street was the most recent to be nominated in 2008, for art direction (which it won), costume design and best actor, although the last one to win major awards for Best Picture, Director, Actor and Actress was The Silence of the Lambs in 1991.

Whether horror films win Academy Awards or not, they tell an interesting story about mass psychology. Research here at Elliott Wave International shows that horror films proliferate during bear markets, whereas upbeat, sweet-natured Disney movies show up during bull markets. Since the Dow has been in a bear-market rally for a year, now is not the time for horror films to dominate the movie theaters. But their time will come again.

In the meantime, to catch up on why all kinds of pop culture -- including fashion, art, movies and music -- can help to explain the markets, take a few minutes to read a piece called Popular Culture and the Stock Market, which Bob Prechter wrote in 1985. Here's an excerpt about horror movies as a sample.

* * * * *

From Popular Culture and the Stock Market by Bob Prechter

While musicals, adventures, and comedies weave into the pattern, one particularly clear example of correlation with the stock market is provided by horror movies. Horror movies descended upon the American scene in 1930-1933, the years the Dow Jones Industrials collapsed. Five classic horror films were all produced in less than three short years. Frankenstein and Dracula premiered in 1931, in the middle of the great bear market. Dr. Jekyll and Mr. Hyde played in 1932, the bear market bottom year and the only year that a horror film actor was ever granted an Oscar. The Mummy and King Kong hit the screen in 1933, on the double bottom. These are the classic horror films of all time, along with the new breed in the 1970s, and they all sold big. The message appeared to be that people had an inhuman, horrible side to them. Just to prove the vision correct, Hitler was placed in power in 1933 (an expression of the darkest public mood in decades) and fulfilled it. For thirteen years, lasting only slightly past the stock market bottom of 1942, films continued to feature Frankenstein monsters, vampires, werewolves and undead mummies. Ironically, Hollywood tried to introduce a new monster in 1935 during a bull market, but Werewolf of London was a flop. When film makers tried again in 1941, in the depths of a bear market, The Wolf Man was a smash hit.

Shortly after the bull market in stocks resumed in 1942, films abandoned dark, foreboding horror in the most sure-fire way: by laughing at it. When Abbott and Costello met Frankenstein, horror had no power. That decade treated moviegoers to patriotic war films and love themes. The 1950s gave us sci-fi adventures in a celebration of man’s abilities; all the while, the bull market in stocks raged on. The early 1960s introduced exciting James Bond adventures and happy musicals. The milder horror styles of the bull market years and the limited extent of their popularity stand in stark contrast to those of the bear market years.

Then a change hit. Just about the time the stock market was peaking, film makers became introspective, doubting and cynical. How far the change in cinematic mood had carried didn’t become fully clear until 1969-1970, when Night of the Living Dead and The Texas Chainsaw Massacre debuted. Just look at the chart of the Dow [not shown], and you’ll see the crash in mood that inspired those movies. The trend was set for the 1970s, as slice-and-dice horror hit the screen. There also appeared a rash of re-makes of the old Dracula and Frankenstein stories, but as a dominant theme, Frankenstein couldn’t cut it; we weren’t afraid of him any more.

Hollywood had to horrify us to satisfy us, and it did. The bloody slasher-on-the-loose movies were shocking versions of the ’30s’ monster shows, while the equally gory zombie films had a modern twist. In the 1930s, Dracula was a fitting allegory for the perceived fear of the day, that the aristocrat was sucking the blood of the common people. In the 1970s, horror was perpetrated by a group eating people alive, not an individual monster. An army of dead-but-moving flesh-eating zombies devouring every living person in sight was a fitting allegory for the new horror of the day, voracious government and the welfare state, and the pressures that most people felt as a result. The nature of late ’70s’ warfare ultimately reflected the mass-devouring visions, with the destruction of internal populations in Cambodia and China.

Learn what's really behind trends in the stock market, music, fashion, movies and more... Read Robert Prechter's Full 50-page Report, "Popular Culture and the Stock Market," FREE

Comments

[David]

have posted an update for the asx 200 for those interested. looks like the global markets are starting to rollover before the US.

http://www.tradeyourwayout.com/2010/03/asx-30min-chart-update-wave-3-down.html

[Chester]

Eh.

This horror movie stuff seems very vague and malleable and easy to fit into whatever you want it to mean. Scientilgology sociocrapomics.

[y]

turn over neat week, no next month, no next year.buy put and more put

[Chester]

Hey, y--

I will definitely do what you say because I respect your methods and your track record (zero for zero, right?). But just to be clear, do you want me to "turn over neat next week, no next year. buy put and more put"?

Thanks for the excellent work.

[Chabazite]

FTSE stuck at 5600 - 5650 or thereabouts for around seven days now. Despite the US markets making steady progress the FTSE 'just can't go no foither.' Good option to short from here IMHO. Best. Chab.

[Sean]

Yelnick, this post makes me LAUGH!

I vividly recalled the last article of Pretcher that I read -- about the Bull/Bear market reflections in the Color of CAR!

Yes, Precther use popular color of Fords (in the ancient times) to recent top car colors to make his point of Super-Century-Bear-market. I think that was back in 2006 or so!! Anyway, SPX marched much higher and I realized Precther is just a real loser and a fake guru.

You don't invest in stock market just by colors of cars!!

[Fibonnaci Magic!]

The ever-unfolding waves of beauty as elucidated by Prechter with the unassailable help of his chubby friend Kendall can best be seen as psychosocial representations of the moods of mass populations attempting to herd in five steps/three steps fashion.

Dracula, Halloween, the Wolfman, Twilight --just to take four examples!

Therefore, we are in a major, major, Grand Superduper Cycle Wave III of iii of 3 and caution should carry the day. Hold puts, hold short, invest in cash, gold and the Idiot Wave Theorist today. Only 16.18/month --a bargain when you consider that you would have lost 100% of your cash buying puts since 1987.

Please look around at the black colors, the hemlines, the magazine covers, and, yes, the horror movies.

Thanks for the terrific insights, Yelnick! What fascinating, intellectual super-scientific, wonderful dreck on which to ruminate... and TRADE!

[Sean]

Highly recommended?

[cloudslicer]

Well, if this is a new cycle wave bull we can look forward to the return of mini-skirts :)

[johny john]

everybody here is still short sp? good work guys good work....

[marketman]

Carl Futia turned-around and (yesterday) gave up on his call for an imminent decline down to the 1120-1130 SPX level and got long today; not once, but twice and is making money again.

[Lazarus]

Sociobabble never left.
Prechter isn't McLuhan.

[You Are Better Than This]

Yelnick, this pseudo-intellectual junk is stinking up your site. Suggest you replace with a big photo of Robert Precter's *%^&

[I got an idea!]

Why don't all you whiners start your own blogs? Then, you can decide what does and doesn't get posted!

[TD]

Precther needs to focus more on EW and making solid calls vs movies

[marketman]

Special Alert from Prechter!

http://www.youtube.com/watch?v=qANMjwLmo6Y

:)

[REPENT]

THAT LIFE OF BRIAN THING IS NOT FUNNY! PRECHTER IS TRYING TO HELP YOU! CAN'T YOU SEE! GET YOUR OWN BLOGS IF YOU CAN'T STAND THE TRUTH! GET YOUR OWN BLOGS IF YOU ARE TOO CHEAP OR DUMB TO SUBSCRIBE TO EWI! DO NOT WATCH HORROR MOVIES IF YOU ARE TOO BLIND TO SEE THAT THEY HERALD THE ONSET OF THE GREAT DEFLATION! DO NOT WHINE AND COMPLAIN THAT YOU WERE NOT WARNED AND THAT IT IS HARD TO MAKE MONEY IN THE MARKETS! PRECHTER HAS TOLD US, TIME AND TIME AGAIN, GOLD IS NOT SAFE. DO NOT THINK YOU CAN HIDE AND THE CRASH AND THE RAGING DEFLATION AND THE HORROR MOVIES WILL "ALL GO AWAY." THEY WILL NOT. THERE IS ONLY ONE WAY OUT OF THIS MESS AND IT IS THROUGH PRECHTER. HIS ANALYSIS, WHETHER OF STOCKS, BONDS, GOLD, HORROR MOVIES, POLITICS, OR YOU VERY LIVES, IS THE ONLY THING THAT WILL SAVE YOU. CAN'T YOU SEE? DID BEAR STEARNS AND LEHMAN NOT COLLAPSE? WHAT ABOUT THE "PIIIGS"? WHAT ABOUT JUNK BONDS??? THE MAINSTREAM MEDIA AND GRIPING LOSERS LIKE WHOEVER POSTED LIFE OF BRIAN ARE SHEEP THAT WILL BE LED TO THE SLAUGHTER WHILE WE WHO HAVE TRUSTED PRECHTER AND SUFFERED WITH HIM THROUGH THE FALLOW PERIOD, THE "DAYS IN THE DESERT" ARE FINALLY REWARDED. THIS IS NOT A TIME FOR HUMOR. DARNESS BEFALLETH THEE WHENCECOMETH YOUR PRIDE?

A lightning bug
deflation, gold
will fall too.

--BASHO

[yelnick]

Chester - my comment is the same as the Life of Brian clip. I would actually not recommend shorting until we have confirmation of a downdraft. Never try to peg the top. Wait for a drop that confirms.

[cloudslicer]

Yelnick,

I think I see a sector where a new asset bubble has formed: high yield bonds.

I think that the witches brew concoction of artificially low interest rates, a lack of a social security cost of living adjustment, inflation combined with the retiring of the baby boomers should force the elderly into to taking on a higher degree of credit risk in order get higher income. Also many 401k investors are in age based asset allocation mutual funds which are now driving money into bonds.

I see this as one of the the central themes of cycle wave B off the 03/09 lows:

Junk bonds go mainstream.

[Greg]

Nice post. It's interesting, a couple of weeks ago the focus was on the bearish EW count, etc. Now the market embarrasses some "gurus" so let's focus on P/E ratios, fundamentals and cultural trends. All is great but I still wonder why do we even bother to check what Mr. P and Mr. G are saying.

[yelnick]

Cloud, you may be on to something about junk bonds. Near the end of a bubble echo, we would expect them, commodities, emerging markets, and the dogs of the Dow to have their day in the Sun

[Ashish]

Yelni,
Very insightful article. Back here in India, i do see socionomics reflecting the bull market in the economy.. people/cultures/sub-cultures are opening up... there is a desire to cut the differences and work together.. the movies and music are getting more creative and stretching the barometer..

I wonder if Socionomics considers Sports too.? I do see a very distinct revival of interest in sports in India. Remember the US/Europe 'dominating' the sports news in the 80s and early 90s.. remember Lendl, Boris, Stefan Edberg, Carl Lewis to name a few... and was the Chinese domination of Olympics in the mid/late-90s a precursor to the coming economic boom?
Would someone from the great sporting nation of Australia chime in about their views?
Wouldnt sports activity be a precursor to the larger economic activity in the nation? Ofcourse excellence in a particular sport can be a false start as can be seen in some african nations....

[yelnick]

Ashish, the Socioeconomics view of sports is that happy sports do well in bull markets, like baseball (which probably would encompass cricket), golf, tennis, basketball and similar; whereas more violent sports do better in bear markets, such as hockey, American football (which probably means rugby does better than soccer), roller derby, etc.

They also believe the heroes of the bull market sports get pulled down in the bear, and new heroes emerge. We already are seeing that, with first a number of baseball stars being disgraced by steroid scandal, including the all-time home run king, Barry Bonds; and now Tiger Woods in golf.

This would open up room for Indian cricket masters to emerge on the world stage, or I suppose given recent events Canadian hockey stars.

As to the Beijing Olympics, I suspect it marks a high point for China, not a kick off to new heights. The Shanghai Expo is not getting anything like the same acclaim or attention.

BTW when do you expect India to bid for the Olympics?

[Ashish]

Thanks for your insight again Yelnic. As for India bidding for Olympics, well, looking at the way the preparation for hosting Common Wealth Games (its the Olympic of former UK colonies) in Oct-2010 is being conducted, India is not ready for Olympics for the next 10 years atleast.
And if Beijing Olympics marked the high point for China, I hope India doesn't host one for the next 2 decades!