The Hollywood Indicator

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It is no secret that we traders love it when Hollywood takes a look at our industry, even when we consider that mostly, the treatise will not be complimentary. Is this some form of masochism or narcissism? I’ll not go that far but will suggest that when scrutinised, most people will be more than a little curious to see the results.

What is not as widely known about the release of these movies, is the effect they have on Financial Markets – in particular major stock indexes. In the USA, this phenomenon is known as ‘the Hollywood Indicator’. The most recent of these, Wolf of Wall Street was no different and immediately after its release, the S&P 500 fell. Some commentary in fact, suggested that a crash was imminent.

The Surfing the Pips tool kit does not contain a Sell entry indicator that resembles a feature film but we can’t help but be curious, as to why a movie can have such an impact on Financial Markets. Well the answer is really staring us in the face isn’t it? Almost without exception, these films are based on the unscrupulous cavorting of heartless individuals who will stop at nothing to secure their fortunes. The central character is normally larger than life and willing to make money without regard for anything or anybody. Ultimately, they pay the price of this outrageous behaviour and lose everything and everybody.
Little wonder then, that the Market’s Character is called into question and that consumer confidence wanes in the film’s wake. This lack of confidence manifests in fund redeployment as investors withdraw their funds from the market, not wishing to associate themselves (and certainly not their money) with the financial cannibals that Hollywood is only too happy to showcase. End of story?………well no, not just yet.

There is a second answer to the question – this one not as obvious and maybe not even factual but worth consideration. It involves those who see only the rise of the hero, the unbridled excitement of massive wealth and the perceived riches and rewards being portrayed on the screen. These individuals perhaps see a hot market and believe they have received a ‘sign’ (via the movie) that their time has come to shine. They pour their money into a market that has made its move! Large investors rub their hands with glee and gladly accept the buy orders and divest their portfolios of the ‘Hot Stuff’, causing the prices to fall and the ultimately, the market to crash. The ‘cannon fodder’ investors are left to reflect on a few moments of exaltation followed perhaps by a lifetime of regret that their pensions are gone.

Which answer is correct? Maybe both………..maybe neither!

In fact, this scenario creates more questions than it does provide answers. Questions like – How is it possible that actors portraying either contrived or exaggerated accounts of rogue operators that may or may not exist or have existed, have such a profound effect on our emotions and decisions? How can a film, advertising, newscasts, social media or any of the information overloads that bombard us daily, affect us or worse – control our lives so dramatically.

Well, after much deliberation, only one answer seems plausible.

WE DO NOT know ourselves.

We are losing touch with our inner being – perhaps slowly, but absolutely without doubt. We rely more and more on technology to perform our daily lives…….to communicate, to watch, to listen, to read and yes, even to procreate (though traditionalists are resisting vigorously). The obsession we have with all things technological, just like Newton’s third Law warned us, has a cost. Whilst concentrating our every waking moment on external entities, what’s happening inside us? In truth, very little to nothing because we have lost touch – we are not relying on our inbuilt resources to perform day to day functions and like the mantra says: Use it, or lose it!
“People were created to be loved…………..Things were created to be used

The reason the world is in chaos is because Things are being loved and People are being used.”

Consider the physical cost – can you walk for only a short time without feeling out of breath, or maybe the legs burn or the feet get sore? Is everything functioning as it should? If not, that would be cause enough for concern but there’s much more to consider.
What about our emotional and cerebral health. With the constant bombardment of external information that must be processed, where is there time to listen to ourselves? We are no longer accustomed to ‘the silence’ because in silence……we find ourselves. But the last time we spoke with us was some years now and we’ve become complete strangers and quite afraid to resume communication.

The lack of close communication with and awareness of ourselves leaves us at the mercy of all number of stimuli in our environment. This new environment is not that of ‘natural’ man and is overflowing with stimuli that zero in on our instincts. It’s an environment that is ever changing in a heartbeat, allowing us no time to acclimatise to the latest crop of SUPER TRIGGERS.

Could trading possibly re-acquaint the estranged US?

In trading, there simply is no choice – it’s communicate or crash and burn! Trading engenders fears as we struggle with our emotions. To succeed, it will be necessary for us to recognise and understand our emotions in order to conquer them and ultimately utilise and exploit them.

Is this not the mantra of any thinking 21st Century individual………….Technology is fantastic if put to useful purpose and not for destructive or harmful reasons! The movies themselves acknowledge this with James Bond fighting feverishly to keep the evil villains away from innovative and powerful technology.

As traders, we embrace the technology that allows us to trade from our armchairs or beach towels anywhere in the world. If we are not in tune enough with our actions however, we will become as our aforementioned cannon fodder hitting the trading ‘floor’ with a tremendous thud. Recovery from this position – almost impossible.

Our job as traders, is merely to manage the data that flows through our charts – to distinguish between genuine and false stimuli, just as in life. A miscommunicating US will tend to blur the lines and lead us into Disneyland!
Cause for alarm?

No, cause for joy! With every opportunity to improve comes a whole new world. In this case an inner world that disguises massive potential which in turn, disguises endless serenity. To know oneself is to enlarge and deepen the centre of gravity of our life and be better equipped to withstand the knocks and shocks that shape the environment in which we live.

When you deal with yourself and become both friend and family with the self, conquering all manner of foe becomes easy, winning becomes natural because you are facing the outside world as a combined force.

Ready to meet yourself?

If the answer is yes – an appointment is essential. Not with your counsellor or priest but with yourself, using some little tricks and advice.

Guest Post by Geoff Pyne of http://surfingthepips.com/

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