If you have a little luck, any luck at all, if you do it right,
there’s a great possibility you can teach the whole world how to dance
–Pat Conroy, 1945-2016
My mind has a mind of its own. I want to concentrate. My mind has other things to do. So, here I am, seventy-seven years old, working with my primary physician to find out where I lie in the Attention Deficit spectrum.
Researchers have identified six different types of ADD. Some types can greatly expand productivity. Some types work the other way. I find it near impossible to do what I have to do, which is to focus intently on an abstract flow of information for six hours a day. Hence my attempt to chemically alter nature. On the evidence, I stand a good chance of getting close to what I want with no adverse consequences.
Nature is amenable to minor tweaking. We can do stuff like using chemical compounds to produce temporary mood variations without damage. Not so in the bigger picture. Empiricist Ralph Elliott observed a pattern in markets that produces growth through expansion and contraction of values that corresponds to the patterns of growth, death and renewal in nature. He named the pattern Nature’s Way.
In the markets as in nature, the dying, or declining phase is the most important part of the process, as it serves to flush the excesses out of the system, paving the way for new growth. Left on its own, the market can do this in small, manageable increments that keep the system healthy without undue stress to the economy. It is when we try to avoid the pullbacks that the rot, excess debt, and imbalances bring the system to the brink of systemic collapse, which is where we are today.
Elliott did observe that corrections and expansions varied in dimension, periodically occurring in what he called Supercycles and Grand Supercycles, but he did not have anything to say about why this was so.
Through his own observations, Robert Prechter linked the market cycles with cycles of social behavior, positing in Socionomics, his hypothesis on human behavior, that the pattern in the markets corresponds to the underlying force that drives all human activity, which is social mood.
The locus of mood is the brain’s limbic system. It is the generator of the unconscious herding instinct that humans default to in uncertainty. This instinct functions vitally in our natural drive to survive and thrive. Unfortunately, it emanates from the primordial, reptilian part of the brain, which has no sense of when enough is enough. In a long rising trend, society becomes addicted to more. We are eventually loathe to take the castor oil of a suppression of growth, and we require that our central bankers keep the party going with debt.
We are all complicit. We could have reigned in the economy decades ago, but that’s not normal. Normal is to kick the can down the road until the can goes over the cliff. We are staring over the abyss now.
Most of the markets around the world are hard into Grand Supercycle bear markets. In the U.S. the economic data steadily worsens, the secondary averages have turned down, and the only question in the major averages–the Dow Jones Industrial Average and the S&P 500 Index, is whether they will make one final high this year before joining the rest of the market, or will, in the case of the Dow, get up another 500 points or so to around 17,500 and stop. Either way, check your antifreeze, winter is coming this summer.