The Wave Principle of Human Social Behavior and the New Science of Socionomics

This book DESTROYED many of my cherished beliefs, which is exactly what I like to see! Robert Prechter is a rare individual indeed, not afraid to challenge the [conformist, consensus, severely [constrained, limited]] mainstream academics, who need this more than I. Furthermore, many of my long-held suspicions finally found expression – and I really wish I had read it when published in 1999! I have the same feeling about essentially ALL [government, academic] scientists as he does financial theorists. I suspect that this is a universal affliction of homo sapiens.

Maybe I’m missing something but all I saw was cherry-picking examples to support a hypothesis that Fibonacci sequences and their .618 ratios are fundamentally related to human behaviors including the stock market. I understand there are thousands of guys analyzing previous trends claiming to have found the Holy Grail; statistically a portion will forecast correctly and therefore convince themselves the’re on to something. As a neuroscientist interested in certain aspects of group dynamics, I found the psychology parts weak. Again, the author quotes from mostly ambitious/famous scientists claiming to be able to distill complex scientific problems with a clever quip. I don’t feel confident enough to completely discount the hypothesis but I’m at least 61.8% sure you can pass this book up.

A fascinating look at how groups of individuals act in demonstrable, reproducible patterns, similar to the genesis and movement of hurricanes, plants and other fractal based systems.

Apparently ‘random’ phenomena such as stock market runs appear to be commanded by an ‘invisible hand’ that waves in repeated fashion.

If the Elliot Wave Principle interests you, this book will be an exciting read.

As someone who is extremely interested in how the brain works and why we ‘do what we do’, as “rational” human beings, I found this book to be extremely compelling. I simply could not put it down. Prechter takes a huge compilation of material (from neuroscience, psychology, fractal anaylsis to technical stock market analysis) and boils it down into a beautifully written and fascinating look at how our mind and society is shaped and guided by an underlying mathematical pattern that is the foundation for all living systems.
We are lead by Prechter through a basic understanding of Ralph N. Elliott’s Wave Principle – a technical method of stock market analysis Elliott discovered during the 1930’s – and come to find that this pattern is fractal based, and not only indicates where the NASDAQ is going to go tomorrow, but shows us where we will go as a society!
This book is a must read for anyone studying brain function, psychology, or philosophy AND for the beginning and seasoned trader! I wish I had found this type of information years ago.

About twenty years ago, I was sitting in the office of a blue blood firm on Wall Street. The elderly partner closed the door, opened his desk drawer and asked: “Do you know about this?” I expected that the book he was handing me was either erotica or esoterica. It was the Elliott Wave Principle by A.J. Frost and Bob Prechter. Yes, I had heard of it, but not everyone had. Now, aspects of it are available on almost every investor’s computer. It has become something of a universal language. But, one can order coffee in different cultures and in different cafes, but be served very different qualities of coffee. It depends on the Barista! Elliott wave may be known, but it may not be cognized. It is invariably associated with Bob Prechter. But he has always acknowledged that he was developing other people’s ideas. Prechter has been famously known as being a fabulous bull and infamously regarded as a dire bear. Elliott wave is burdened with the Taboo of being “Technical.” Many barbs against Technicals are conveniently anchored against Elliott. Elliott was, in part, developing the preliminary theory of Charles Dow whose eponymous average we wrestle with every day. Whether or not the majority recognizes the Elliott wave paradigm, there are patterns in markets which cryptozoic market speculators use every day.

Bob Prechter’s new book, The Wave Principle of Human Social Behavior, subtitled the New Science of Socionomic([…] may represent his defining contribution to finance. It includes Elliott Wave but delves much further into the frontiers of finance. Investor psychology (the “Psychologicals,” as I call them) are subsumed under the larger scale of Sociology (the “Sociologicals?”) His book provides new material on Herding and Mood which are the pith of Behavioral Finance. Perhaps most compelling are his insights into popular culture. His analysis of how art, music, sports and political trends relate to the market is unique. The book includes photographs of historical events which show the synchronicity of markets and financial culture. This is related to what I call “Pagegrading” in my book, Behavioral Trading. Front page photographs are a powerful limbic rendering of the Zeitgeist. The Socionomically inclined can read markets from the Social Mood and vice versa. He demonstrates that “Social Mood” is patterned and has a reflexive predictability with the market. The difficulty many people have with Elliott is their apprehension that they have to learn all of the details. But, much can be gleaned from a more generic appreciation. When we go to a Japanese restaurant, we don’t expect to learn how to make sushi. We could probably learn exactly how to do it, but only with great passion and practice. Why not just drink the sake and begin to think a little bit Socionomically? The difficulty with Philosophy is that it is always relational and hierarchical. A market philosophy provides a framework for thinking which may not always deliver an easy course of action. Socionomics is a new worldview which ultimately requires a “Metanoia” or change of mind. Prechter provides ample evidence of his Socionomic proposition. But proof may not be enough at the present time. Observe smokers, holding a cigarette pack saying “smoking kills.” Everyone knows that they kill, but they do not necessarily cognize it. Thus, smokers are happily smoking with at least one of their three brains. Investors are happy calculating P/E ratios and buying stocks which should do well. We don’t cognize the market. Socionomics states that men make markets move in habitual ways which are rather precisely mirrored in popular culture. The New Science of Socionomics is an important touchstone in the search for intelligent life in financial markets. We should cognize it if we can.

This book shows a very important study about our behavior and how to increase our gains in all situations using this study. If I had read this book before, my life wasn’t the same. Congratulations. I recomend to all who wants to be a winner.