Mind – The Fundamentals

E*RAK Slogan Search and the S&P 500

The history of markets demonstrates that the extreme of every market era is defined by a compelling concept which becomes so popular that if effectively becomes a slogan. The relationship between slogans and market indices can become extraordinarily correlated. Whenever investors became the most obsessed with Iraq, as noted in the slogan search below, the stock market was bottoming. When investors became complacent about Iraq, stocks were topping. During the time period in the graph, the E*RAK slogan maintained an 85% correlation with the S&P 500. When anything becomes a slogan, it means something much greater than itself. So as the Transient Investment Theme of Iraq achieved slogan status, we re-named it E*RAK. The extreme degree of the E*RAK slogan in March of 2003 was one of the research components that led Market Semiotics to issue a bullish forecast on 3/11/2003 for a 5-month rally.

Slogan Search Results for Iraq

Transient Investment Themes Coincide with Market Extremes!

D•Flation Slogan Search & Bond

An Ear for an Era

Identifying Extreme Financial Slogans

Market Semiotics has created a model for evaluating the phase of any Transient Investment Theme or Fundamental Story. Triunity Theory posits that the propagation of market stories follows a predictable path. The study of how ideas propagate is called Memetics. A meme, like a gene, is transmitted from one person to another, but a meme is an information code rather than a genetic code. The Semiotics Memetics Model offers a new way to understand why financial slogans seduce the majority of investors at market extremes such as the E*Greed slogan, which we identified in Q1, 2000. The Semiotics Memetics Model shown below suggests that investment themes achieve maximum appeal when they achieve slogan status. Once a meme or a fundamental idea peaks in the propaganda realm, they finally lose their power to attract new investors into their investment paradigm.

Financial Slogans Identified by Market Semiotics

Fant-Asia; Q3, 1998: The compelling conventional wisdom was to abandon all Asian assets, sell stocks and buy dollar bonds. In actuality, bonds were a great sale and stocks presented a major buying opportunity.

E*Greed; Q1, 2000: The majority of investors were led to believe that it was easy to become as rich as you wanted by buying into the new economy dot.com paradigm. Market Semiotics predicted that a major stock market high would lead to the most severe bear market in 20 years.

E*RAK; Q1, 2003: The consensus was convinced that deflation and the renewed threat of recession argued for avoiding stocks (E*Quiphobia) and staying safe with bonds. Market Semiotics suggested that stocks had already bottomed in 10/2002.

The Market Semiotics Memetics Model