THE BOOM/BUST CROSSOVER
ON 9-OCT-07
THE DOW JONES
INDUSTRIAL AVERAGE INDEX AND
THE S&P 500 INDEX HIT ALL-TIME HIGHS ON 9-OCT-07. WHAT WAS ON PEOPLE'S MIND
PRE/POST THE CROSSOVER?
PSYCHO-MARKET ANALYTICS
|
"In all of the panics there were recognizable constants. First came an expansion in business activity. This usually centered on some dominant form of investment. . . Then, as time passed, expansion gave way to speculation. . . The banks, needless to say, provided the money that financed the speculation that in each case preceded the crash."1 John Kenneth Galbraith |
9-Oct-07 marked the boom/bust crossover point for both the Dow and the S&P 500. Both the Dow and the S&P 500 hit all-time highs ─ 14,164.53 and 1,565.15, respectively ─ on 9-Oct-07.2-3, 5-6 The NASDAQ peaked twenty-two days later ─ at 2,859.12 on 31-Oct-07.4-6
What Was People's State of Mind Prior to the Boom/Bust Crossover?
The psychological state of mind of people around the world during the 7-day time period prior to the crossover was as follows:
How could people be both HAPPY 83.3% of the time and in PAIN 100% of the time? How could people focus no high attention on DEBT while immersed in the subprime mortgage meltdown? The answer is simple:
- People were IRRATIONALLY EXUBERANT 83.3% of the time.
The flawed wars in Iraq and Afghanistan, the subprime mortgage meltdown, the high concentration of wealth, the exorbitant wealth gap between the rich and the poor, the extreme volatility of markets, the super high economic uncertainty, the massive illegal migrations, the enormous government and personal debts, the bankruptcies and foreclosures, etc. ─ all conspired to create GENERAL PAIN.
But how did people manage to remain IRRATIONALLY EXUBERANT 83.3% of the time. The answer again is simple:
- "They were dazzled and overwhelmed by the false and deceptive buzz, glitter, sophistry, propaganda, and pleasures of the marketplace."7-8
What Was People's State of Mind After the Boom/Bust Crossover?
During the 7 days Pre/Post the boom/bust crossover:
The tables below summarize our key findings. Four Pre/Post Iowa periods are investigated: 10-Oct-07 (0:00 AM PT) ±1 day, ±7 days, ±30 days, and ±90 days.
EMOTIONS PRE/POST THE BOOM/BUST CROSSOVER -90 Days -30 Days -7 Days -1 Day 10-Oct-07
(00:00 AM PT)+1 Day +7 Days +30 Days +90 Days 83.3% Happy
25.0%
65.2% 65.0%
67.2%
46.3%
16.7% Unhappy
75.0%
34.8% 35.0%
32.8%
53.7%
0.0% Angry 0.0% 17.4% 10.0% 11.5% 18.5% 16.7% Troubled 50.0% 17.4% 15.0% 16.4% 18.5% 0.0% Confused 25.0%
0.0% 5.0% 4.9% 14.8% 0.0% Hopeful 0.0% 0.0% 0.0% 1.6% 1.9%
FEELINGS PRE/POST THE BOOM/BUST CROSSOVER -90 Days -30 Days -7 Days -1 Day 10-Oct-07
(00:00 AM PT)+1 Day +7 Days +30 Days +90 Days 0.0% Pleasure
33.3% 36.0% 41.2% 39.7%
33.3%
100.0% Pain
66.7% 69.4% 58.8% 60.3%
66.7%
100.0% Perplexed 0.0%
19.4% 0.0% 7.1% 12.2% 0.0% Hostile
0.0% 25.0% 23.5% 15.9% 27.8% 0.0% Entangled
66.7% 22.2% 29.4% 36.5% 24.4%
IRRATIONALITY PRE/POST THE BOOM/BUST CROSSOVER -90 Days -30 Days -7 Days -1 Day 10-Oct-07
(00:00 AM PT)+1 Day +7 Days +30 Days +90 Days Exuberance 83.3%
Gloom 8.3%
Exuberance 34.7% Exuberance 23.8%
Exuberance 27.5% Exuberance 13.0%
HIGH AWARENESS PRE/POST THE BOOM/BUST CROSSOVER -90 Days -30 Days -7 Days -1 Day 10-Oct-07
(00:00 AM PT)+1 Day +7 Days +30 Days +90 Days 100.0%
Religion
100.0%
85.7%
71.4%
86.7% 73.3%
64.4% 63.3%
100.0%
Money
0.0%
28.6%
14.3%
20.0% 30.0%
27.8% 22.2%
0.0%
Arithmetic
100.0%
0.0%
14.3%
3.3% 3.3%
5.6% 2.2%
42.9% Truth
14.3%
23.3% 16.7%
15.6%
17.8%
14.3% Law
14.3%
10.0% 6.7%
%
%
0.0% Justice
14.3%
13.3% 10.0%
11.1%
6.7%
0.0% Deceit
0.0%
3.3% 6.7%
3.3%
14.4%
0.0% Debt
0.0%
3.3% 0.0%
4.4%
3.3%