This post explores the idea of predicting major shifts in mass psychology. Just as we as individuals have ups and downs, so too do we as a society. For quite some time, we have been up. People have jobs, the economy has set a record for the longest peace-time expansion, the financial markets here in the U.S. are near or at all time highs, and confidence remains very high. The thing the masses expect is continuation. Most on this forum do not, having knowledge of Y2K. It is for this reason that I think you may find this post interesting - for a shift of social trend is coming. Big Time.

Being interested in financial markets, I picked up a book back in the fall of 1996 called "At the Crest of the Tidal Wave" by Robert Prechter. This is before just about any of us were aware of Y2K at all, never mind to the extent we are now. It is about his use of the Elliot Wave Principle to forecast changes in trend - with an emphasis on financial markets. (He presently forecasts a devastating bear market.) At the time I found the whole thing fascinating because it was new to me and provoked thought. There are other principles based on different wave theories as well. Let me say here that I neither dismiss nor subscribe to any of them. I am not even really familiar with them. My interest is purely speculative.

What may be of interest to the forum is that the Wave Principle is a tool which is believed by its proponents to forecast major trend shifts in social mood. This is one of the things we all keep waiting for with Y2K. When will the masses Get It? I remember the author making the point that his financial forecasts are at root, social phenomena. (I think of this, correctly or incorrectly, as mass psychology). One of the main points is that people expect the continuation of whatever the present trend is, which also prevents them from recognizing the signs for a major change. I liked that. A lot. Now think about Y2K and some of the reasons as to why folks just Don't Get It. Are they in the "continue the present trend" mindset?

So proponents of this theory think that they can use it to predict a major trend change in social mood, even though the use of the tool seems to be primarily for forecasting financial markets. What I think you may find interesting is this social phenomena aspect. I offer the following two short excerpts from the book and ask that you keep in mind that it was written in1996, and also that it was not in the context of Y2K, but rather in the context of a devastating crash in financial markets which the author believes is still to come:

"Because human progress takes place in a 'three steps forward', 'two steps back' manner, it is clear that the 'two steps back' are required to put psychology and motivation in a condition to support the next geometric rise in material, social, and intellectual progress. Corrections may be part of the mechanism of life itself. The very ultimate success of life may depend upon the occasional weeding out of those not intelligent enough to prepare, strong enough to fight, benevolent enough to avoid participating in the destruction of others, or unlucky enough to be in the wrong place at the wrong time."

"The magnitude of the coming crash and depression will dwarf any previous such difficulty the country has experienced. The resulting calamity will be the single most important influence on your personal and professional life for the duration. It will affect most things that happen to you, that you decide to do, or that you are forced to do. It will affect your business, your professional and personal relationships with other people, your friends and members of your family. If you are part of society, you are going to have to deal with the coming changes one way or the other. The question is, will you deal with them from a position of strength and confidence, or will you react in panic along with everybody else? It is important to come to grips with the implications early. If you get your house in order before the new trend begins, you will be able to avoid much of the damage and, in fact, take advantage of the upcoming historic opportunities by calmly making opportunistic decisions when the time comes."

Just for fun, read the last paragraph again, only substitute "Y2K" for the words " crash and depression". See what I mean?

-- Rob Michaels (sonofdust@net.com), January 21, 1999

Answers

The psychology shift has already begun in many rural/ag areas of this country. There are still a few who are holding onto hope for some kind of miraculous recovery, but many people are resigning to the fact that the low commodity prices are here to stay...and will go even lower when/if the rest of the market follows. The media seems to hang on to the terms "recession", "financial crisis", and "monitary meltdown". They avoid using the D-word (depression) altogether. They might even stretch to say "severe recession". It's hard to see how our civilization is going to avoid another great depression, if not even greater than 1929-1939. Actually, many ag-based regions in this and other nations are already headed that direction. It's amamzing to hear the liberal politians continue to exclaim how wonderful and strong the economy is. I'd like to see them come to an area like this and say that in a speech. They would be dodging tomatos.

As another frequent poster on this forum has said many times, "This is the economic context of Y2k."

-- Delete (del@dos.com), January 21, 1999.

Rob, I purchased the book in December of 1995 and have read it a number of times. His prediction back in 1995 was that DEFLATION would be the culprit in the coming Bear Market. He also stood alone in 1978 when he predicted the massive Bull market of the 1980's.

Ray

-- Ray (rayl@whc.net), January 21, 1999.

Along the lines of the above comments, one should also read and consider "The Great Reconing" by Davidson & Reese-Mogg.

They address broader "waves" than Prechter and consider historic patterns.

Both are excellent reads (though Reconing can get very dry at times). Anyone trying to understand "the times" we live in would be well served spending the time to read both.

I went through both Prechter and Davidson & Reese-Mogg back aroung 1992 and have been expecting some type of "bad thing" since then. And positioning myself for it.

I have advocated on other threads the idea of "panic NOW". This was not the joke it sounds like. If one comes to believe that "bad things" are in the offing, it is better to go with the feeling. The Panic cycles. You go in and out.

Get the early stages over with.

When, as the major theme of this thread suggests, the general public Panics, you personally be far ahead.

I strongly suspect that Prechters posit:

"...ultimate success of life may depend upon the occasional weeding out of those not intelligent enough to prepare..."

may be all too true.

The best summary need repeating:

This is the context in which Y2K will occur.

The only hope this old bear looks for is out there at the ends of my arms.

Greybear - who Got It several years age

- Got gloves?

-- Greybear (greybear@home.com), January 21, 1999.

Very interesting thread Rob, thanks.

Greybear, I've done my panic and got it over with, I'm more and more mentally prepared and accept what's coming. But my major problem is how do I make my husband panic now? I still don't have the courage, the mental resources, to go through what's coming alone, that is with a husband who's not now mentally prepared. He will panic, he will be emotionaly devastated. I'm just a little woman, with claws perhaps, but still. I'll never be "ready" until my husband is.

He goes along with preparations, he doesn't argue and call me crazy anymore. But he's not losing sleep, he doesn't and has never initiated Y2K conversations. He's simply resigned to accept and deal with ME, not Y2K.

I'm just venting. I know there's no answer to my questions.

-- Chris (catsy@pond.com), January 21, 1999.

"He goes along with preparations, he doesn't argue and call me crazy anymore. But he's not losing sleep, he doesn't and has never initiated Y2K conversations. He's simply resigned to accept and deal with ME, not Y2K."

Plant seeds in his head. If TSHTF, he will remember conversations with you, and access as required.

As for him being mentally prepared, unless he is subject to breakdowns (not good!), he will probably do WHAT he has to WHEN he has to. Just keep supplying the "stuff" so that he can handle the WHAT.

-- Anonymous99 (Anonymous99@anonymous.com), January 21, 1999.

Delete: I agree that the psychology shift has already begun to varying extents based on many factors such as location and economic class, as two examples. The major shift has yet to come though. Consider that there are 270 million Americans and the vast majority still don't get it. I see Y2K as a potential, and very probable, catalyst to bring about the change in social trend. It may be that instead it will be something else, like a severe market crash, or bank runs, or even some combination of events. The main point is that while a change in trend has started, current 'let the good times roll' mass psychology has a long way to go before the trend is even apparent to the masses.

Ray: Thanks for the correct date of 1995 - perhaps my copy, which was borrowed, was a later edition. Anyway, yes, he did stand alone in 1978 when he predicted the massive Bull market of the 1980's. Wall Street and the masses thought he was nuts then, just as they think we are nuts now. The other side of the coin though is that he has been bearish too early - way too early - since 1987 I think. One joke says that he has predicted 10 of the last 3 crashes. Still, I think he is well worth reading and considering. I do not think his conclusions were wrong on the whole, I think they were early.

Greybear: Regarding "panic now", I have posted the following previously: It is unwise to panic, but if you are going to, then panic first.

Chris, friend, one thing that may be of some comfort is that "hubby" will be helped by your getting it and preparing, on an emotional level as well as any other. So keep your chin up and keep reading him those Y2K stories before he falls asleep. He is not now mentally prepared, but he will be. Have faith in yourself, and he will follow. And I think you are Strong enough to wait, with faith, for you do have the courage of your convictions. As others have said to me recently, "hang in there".

All: I guess the thing that struck me the most about this are the parallels between the effects of a market crash and the effects of Y2K. Certainly, we know there are many differences, especially in degree and magnitude. It is hard to imagine things that are worse than Y2K being a 10. Cause and effect. Regardless of the cause, the effects, at least with some aspects, look to be similar, in the context of social change of trend.

-- Rob Michaels (sonofdust@net.com), January 21, 1999.

Thanks Anonymous99 and Rob, it's good to know a man's point of view on this. I'll keep planting the seeds and will keep my courage in check.

Rob, it's interesting to note that in effect, he is predicting TEOTWAWKI, or at the very minimum and to be clearer, The End of the Cozy Status Quo as we Know It. That's still translates into TEOTWAWKI to me.

-- Chris (catsy@pond.com), January 21, 1999.

I know what Chris is going through. My husband is only preparing a little because I throw fits every couple of weeks. My adult children are tuning me out, and I am afraid my lovely little grandson won't make it.

This awareness is somewhat of a mixed blessing, and I find myself resenting loved ones who are ignoring my pleas that they make some preparations before it is too late. I am beginning to wonder if I should just distance myself now, so the pain of eventual loss gets spread over a longer period of

-- Jaygee Jay (depressed@home.fornow), January 21, 1999.

Chris- I have the same situation with my hubby. I was just asking myself the question "what happens if he does not get it?" (until 1/1/00 that is). Well, I guess I just make the best of it until then. Do not give up and keep plugging away.

-- Jane (jane@doe.com), January 21, 1999.

Rob,

The Kondratieff (sp?) wave cycle indicated there should have been a depression in the 1980's. I don't know if there's anything to this theory or not, but if there is, the cycle has been lengthened by long life expectancy rates.

We've said it on here before...the next depression won't start until most of the people who remember the last depression have died off. Very few people in the 1990's save money. Few people remember that the stock market can go way down as well as way up.

-- Kevin (mixesmusic@worldnet.att.net), January 21, 1999.

For anyone that is interested in the Elliot Wave as it applies to the stock market, steven Williams has a very informative website at: http://www.geocities.com/~CyclePro/Charts/SP500/Outlook.htm He does an analysis every evening of the days stock market action. I have been following his analysis for several months now. He is predicting a severe bear market very soon, as are most other Elliot Wave analists. It is very interesting reading, and worth a check every evening.

-- Economan (Economy@aol.com), January 21, 1999.

Kevin: Yep, I have seen that remark about the depression - I think it is attributable to the economist John Kenneth Galbraith but am not sure. You are right about the savings rate too - Greenspan said yesterday that it is "effectively zero" - here in the U.S. As far as people's memories go, yes, there seems to be a correlation between elapsed time from the previous 'dementia' to the current. One other interesting thing is that Mr. Prechter sees a crash with the Dow going to the 1000 level or below - which is simply unfathomable to most folks. One main idea of this post is that the masses won't get it regarding Y2K until the social trend change is way past its beginning.

Economan: Thanks for the tip - I'll check it out. Also, Mr. Prechter has a site at www.elliottwave.com

-- Rob Michaels (sonofdust@net.com), January 21, 1999.

Rob,

You used a phrase which explains exactly why I call this forum. I need to be able to see the social trend change *before* its effects kick in.

-- Kevin (mixesmusic@worldnet.att.net), January 22, 1999.

FWIW: From last night's S. Williams commentary regarding the market:

"there are many techincal reasons why yesterday's Nasdaq high is quite likely the top of the market, and perhaps the end of the secular bull market as we know it. Before I go overboard and outright announce the bull is dead, I need to spend much more time than one long evening going through my charts and browsing market statistics from various other web sites". Thanks again Economan - cool site.

To return to the discussion of shifts in social trend and mass psychology, it would appear that these types of predictive tools strongest point is in identifying the change of trend beforehand, and the weakest point being that of specific timing. Knowing that the trend is changing is very important, and cannot be seen by most. This in itself lends some value to the predictive value, assuming, naturally, that the analysis is correct.

What do you think?

-- Rob Michaels (sonofdust@net.com), January 22, 1999.

Cat ?

-- Rob Michaels (sonofdust@net.com), January 23, 1999.