Socionomics and Elliot Waves. ----------------------------
The following is a compilation of Bob Prechter's best media interviews. In this Q&A, Bob talks about the validity and practical applications of the Wave Principle and explains Socionomics, the science of social prediction. This is a good starting place for our view on the markets, and it's also a fine primer on Elliott wave theory.
'Can you please explain more about the theoretical underpinnings of socionomics?
Because waves occur, it must be that events outside the market do not impact the market, because if they did, they would have to be perfectly patterned to produce waves. So waves must be caused by some mechanism other than events working on people’s psyches. The best explanation I have is that waves are the product of unconscious minds, which are impelled to mimic each other because of a herding impulse inherited through evolution.
Social events are tied to social psychology, but because waves are endogenous the only possible relationship is that social actions are a product of waves of social psychology, not the other way around. The fact that notable social events follow rather than precede corresponding stock market waves, in my opinion, supports the socionomic hypothesis. The only other explanation for this chronology is “discounting” theory, which is both venerable and absurd. People cannot see a future that hasn’t happened yet. The only sensible explanation is that their shared waves of positive and negative emotions determine the character of subsequent social action. When you listen to and read general financial media, do so from a socionomic perspective. Don’t read what it says; see what it means.'
