Robert R. Prechter, Jr., CMT, is known for developing a theory of social causality called socionomics, for developing the socionomic theory of finance (STF), and for his long career applying and enhancing R.N. Elliott’s model of financial pricing called the Wave Principle.
Prechter’s socionomic theory accounts for the character of social actions in areas as diverse as financial markets, economic trends, politics, fashion and entertainment and demographics. Under development since the 1970s, the idea first reached a national audience in a 1985 cover article in Barron’s. Prechter has made presentations about socionomic theory at the London School of Economics, University of Cambridge, MIT, University of Oxford, Trinity College Dublin, Georgia Tech, SUNY and various academic and financial conferences. In 2008 and 2010, the Georgia legislature invited Prechter to testify before its Joint Economic Committee regarding the state’s developing real estate and economic crises.
Prechter attended Yale University on a full scholarship and received a B.A. in psychology in 1971. In 1975, he joined the Market Analysis Department of Merrill Lynch in New York. In 1979, Prechter founded Elliott Wave International and began publishing monthly market analysis under the masthead, The Elliott Wave Theorist. Prechter served as a member of the board of the Market Technicians Association for nine years and as the MTA’s President in 1990-1991. He currently serves on the advisory board of the MT’’s Educational Foundation. In 2005, Prechter created the Socionomics Institute, which is dedicated to explaining socionomics, and he funds the Socionomics Foundation, which supports academic research in the field.
Prechter has authored, edited or contributed to more than 15 books. His book Elliott Wave Principle: Key to Market Behavior has been translated into a dozen languages, and Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression was a New York Times and Amazon bestseller.
“Social Mood, Stock Market Performance and US Presidential Elections”
The latest research paper by Prechter and his colleagues Deepak Goel, Wayne Parker and Matt Lampert, illustrates that social mood is a good predictor of incumbent U.S. presidents’ fates in their re-election bids. He will present his landmark study at the 2012 Summit. Other scholars have conducted a body of research on stock performance after presidential elections. But very few researchers have reversed that order, to investigate a possible link between elections and preceding stock market performance. Prechter and his colleagues studied the issue from a socionomic perspective and tested if waves of social mood simultaneously drive the valuations of stocks and sitting presidents.
Matt Lampert is a graduate of the University of Cambridge where he currently studies as a doctoral candidate in the sociology department. Lampert contributes to the Socionomics Institute’s research program and works to build collaborative relationships with scholars in his capacity as the institute’s research fellow. He is a board member of the Socionomics Foundation and served as the Socionomics Institute’s associate director for two years before enrolling at Cambridge.
Terry Burnham, Ph.D.
Terry is a finance professor at Chapman University in Orange, California. He has a Ph.D. in business economics from Harvard University and a master’s degree in finance from MIT. Prior to Chapman, he was an economics professor at Harvard University, the University of Michigan, and the Harvard Business School.
From 2005 to 2011, Terry was the Director of Economics for Acadian Asset Management, a quantitative equity manager with peak assets under management of over $90 billion. Terry is the author of Mean Markets and Lizard Brains, and the co-author of Mean Genes. His academic research focuses on the biological and evolutionary origins of human economic behavior.
Terry was the President and Chief Financial Officer of the start-up biotechnology company Progenics Pharmaceuticals, which is now publicly traded (ticker symbol PGNX). He served as a tank driver in the US Marine Corps Reserves.
“The Neural and Emotional Basis of Herding in Financial Markets”
Since the creation of financial markets, people have exhibited herding behavior. Recently, scientists have begun to understand the neural and emotional basis of herding. The evidence suggests three facts about the human decision-making system. First, the brain is not cohesive; there are multiple portions involved in decision-making. Second, the parts of the brain that make decisions may not be the ones that one can access, thus decision-making is non-conscious, and hard to understand through introspection. Third, the dopamine reward system plays an important role in herding.
There are two approaches to limiting the financial losses caused by a brain built for herding. First, it is possible to rewire the brain. Second, investors must use investing systems that do allow part of the brain to impoverish the host.
Kevin is the Founder and Managing Director of AmalgaMood. He created the firm’s patent-pending algorithm that uses text analytics and quantitative analysis on the live Internet (such as social media, user generated content, and news) to analyze the direction of society’s aggregate social mood as it relates to the global equity market.
Prior to AmalgaMood, Mr. Coogan was a founding partner at BR Investimentos, an alternative asset management firm, a partner at the global hedge fund JGP Asset Management, and a proprietary desk trader and equity analyst at Banco Pactual, an investment bank focused on global emerging markets.
Mr. Coogan has spoken widely about using text analytics to improve investment strategy. He is a graduate of the University of Richmond’s E. Claiborne School of Business and holds an International MBA from the University of South Carolina’s Moore School of Business.
“Social Mood as a Predictor of Global Equity Market Inversions”
Coogan’s Summit presentation will explain the emergence of a global social mood, its measurement using text analytics on news and social media, and its predictive characteristics in relation to the global equity market peaks of 2007 and 2011.
Peter W. Atwater
Called “one of the greats when it comes to financial services” by Herb Greenberg of CNBC, Peter W. Atwater is the President of Financial Insyghts, a consulting firm to institutional money managers, hedge funds, foundations and endowments focused on issues facing the financial services industry and the economy.
Atwater is teaching socionomics during the spring term at the University of Delaware, in an Honors Colloquia called Social Mood, Decision Making & Markets. The course “explores socionomics and how social mood and confidence shape the decisions we make every day and the events in politics, economics, science and culture that we see around us.”
Peter has an extensive breadth of experience across capital markets, securitization, consumer credit, investment and wealth management, and bank balance sheet management and accounting arising from more than 25 years in the industry, including building and leading JPMorgan’s asset backed securities business, serving as Treasurer of Bank One and First USA and CFO of Juniper Financial (now BarclayCard US); and serving as COO of Bank One Investment Management and CEO of Bank One Private Client Services.
Peter is a regular contributor to Minyanville.com and his original work has been noted by Marketwatch, NPR, the Financial Times and FTAlphaville. His article “Gimme Shelter” on the US housing market was published in the August 2011 Socionomist. Peter is currently at work on a book about how social mood affects decision making and the markets for FT Press.
Peter graduated with honors from William and Mary, where he was elected to Phi Beta Kappa. He currently serves on the William and Mary Foundation Board where he chairs the Budget and Finance Committee.
“Horizon Preference: How Changes in Social Mood Affect Decision Making”
Atwater will present his “Horizon Preference” model and how changes in social mood innately alter our time, space and relationship horizons. He believes that changes in Horizon Preference are a critical link in the transmission process from a specific mood to a series of consistent specific actions. He will explain why, for example, we naturally prefer to rent, rather than own, during periods of weak social mood. He will also discuss how he is using socionomics and his Horizon Preference model in his consulting work to the money management industry, corporations and public policymakers.
Johan Bollen and Huina Mao of Indiana University are the main authors of the recent study, “Twitter Mood Predicts the Stock Market.” Their widely-reported research said “the number of emotional words on Twitter could be used to predict daily moves in the Dow Jones Industrial Average. A change in emotions expressed online would be followed between two and six days later by a move in the index, the researchers said, and this information let them predict its movements with 87.6 percent accuracy.”
Bollen and Mao spoke at the 2011 Summit and will be back at the 2012 event to discuss their latest research.
Richard L. Peterson, M.D.
From imaging the brains of investors to developing sentiment-based investment models, Richard L. Peterson, M.D. has emerged as a leading expert on the psychology of financial decision making. As Managing Director of the MarketPsych Group, he runs three firms. Through MarketPsych, LLC he trains financial advisors and portfolio managers to improve their client relationships, emotional intelligence, and business development.
As portfolio manager for the outperforming MarketPsy Long-Short Fund LP from 2008-2010, he successfully deployed predictive psychology-based quantitative models based on automated sentiment analysis of social and news media. In partnership with Thomson Reuters his firm MarketPsych Data distributes sentiment and macro-economic indices derived from language analysis (launching February 2012).
In the educational field he has developed popular financial personality tests, published widely in academic journals and textbooks, and is an associate editor of the Journal of Behavioral Finance. His book, “Inside the Investor’s Brain” (Wiley, 2007) was called “outstanding” and “a seminal text” on investment psychology by Barrons and was named one of the top financial books of 2007 by Kiplinger’s. His second book “MarketPsych,” co-authored with Dr. Frank Murtha, was named a “top financial book of 2010” by Kiplinger’s.
Dr. Peterson received cum laude Electrical Engineering (B.S.), Arts (B.A.), and Doctor of Medicine degrees (M.D.) from the University of Texas. He performed postdoctoral neuroeconomics research at Stanford University, is Board-certified in Psychiatry, and is a visiting scholar at Claremont Graduate University. He lives in Los Angeles with his family. He speaks and trains professionals globally on the topics of applied behavioral finance, improving investor and advisor performance, and predictive market modeling with sentiment analysis.
“Investors Reacting: Greed, Fear, and the Predictive Power of Financial Emotions”
In his talk, Peterson will explain investment strategies he has developed from his findings in studying investors’ emotions expressed in financial social media through textual analysis. You might think that investing is a rational pursuit, but then you might not be an investor. Peterson found that emotions — especially joy and fear — are inversely correlated with future price changes in the short term, providing evidence of investor emotional over-reaction. In contrast, investors’ analytical assessments of a company’s future earnings and accounting strength are positively correlated with future stock price directions, as quantified from accounting-related statements. His talk will summarize his research on investor’s emotions, explain the impact of emotion on market prices, demonstrate predictable seasonal variations in emotion, and identify instances of online emotional contagion among investors.
Jose Carlos Carvalho
Jose received a PhD in Economics from Yale University in 1995. Since then he has been working in research and strategy in financial institutions in Brazil, covering both domestic and international markets. He was chief economist at Banco Pactual until the late 90’s, when he moved to be a founding partner of JGP, one of the first hedge funds in Brazil. He is now a partner responsible for macroeconomic research and strategy at Paineiras Investimentos.
“Brazil’s Socionomics: From Basket-Case to Superstar”
Brazil has traditionally been a country of extremes, this aptly applies to its social mood over the last three decades. During much of the 1980s to 1998, the country produced an extremely negative social mood, during which the country experienced hyper-inflation, poor stock and capital market performance, political infighting, and a general economic malaise. From 1999 to 2002, its social mood bottomed. After this transitional period, social mood skyrocketed producing one of the most positive national environments in living history which has been reflected in tremendously strong stock and capital markets, extraordinarily high political popularity levels, and an economic boom.
Leena is a senior researcher in the Exploratory projects of the Advanced Systems Analysis program of International Institute for Applied Systems Analysis. She has worked as a project leader in the Game Changers and the Global Economy 2030 project, currently her main responsibility is the 7 Shocks research methodology development project. Her research theme is uncertainty; she is developing new qualitative methods for foresight and strategic planning processes.
Ms. Ilmola’s activities in the academic community profit from her long experience as a leader and consultant and also an innovator (web-based tools for qualitative research). Her research themes are strategic flexibility and anticipation systems. Her research builds on the Complex Adaptive Systems theory, strategic planning theories and theories on social cognition. Ms. Ilmola is also a member of the Board of the Finnish Futures Association.
“Social Mood Indicator”
Ms. Ilmola will present the qualitative Social Mood Indicator (SMI) that she and her Extreme Events team developed for the European Ministry of Defense. This tool examines shifts in social mood of the population in order to produce a pragmatic indicator for identifying environments that may facilitate the emergence of extreme events.
Euan is a graduate of The University of Georgia with degrees in economics and international affairs. After joining Elliott Wave International in 2008, he quickly discovered his passion for socionomic research and transferred his focus and position to the Socionomics Institute. Wilson is now one of the leading contributors to The Socionomist, the Socionomics Institute’s monthly publication. Some of Wilson’s most noteworthy research has covered social mood’s impact on various cultural trends, including the war on drugs, civil wars, and popular animation characters. Wilson’s research has been featured in Time Magazine, USA Today, The Futurist and Scientific American.