Social Mood Conference  |  Socionomics Foundation

By Peter Kendall | Excerpted from the January 2015 Socionomist


What do skirt hemlines and the stock market have in common?

Pete Kendall’s engaging video surveys 200 years of trends in hemlines, from the floor-length gowns of the late 1700s to the mini-skirt mania of today. His literal “show and tell” about social mood presents the visually rich trends in fashion, as they unfold in parallel with the stock market.

Here is an excerpt of the January 2015 video transcript.

Wall Street’s renowned “hemline indicator” observes that hemlines rise and fall with the stock market. University of Pennsylvania economist George Taylor first made the connection between hemlines and stocks in 1926, and market analyst Ralph Rotnem helped to popularize the relationship in the 1960s. Bob Prechter evoked this indicator as far back as 1985 and showed a wealth of evidence about its psychological importance. He wrote:

In my judgment, it is not unreasonable to hypothesize that a rise in both hemlines and stock prices reflects a general increase in friskiness and daring among the population, and a decline in both, a decrease. Because skirt lengths have limits (the floor and the upper thigh, respectively), the reaching of a limit would imply that a maximum of positive or negative mood had been achieved.

So when we happened upon the Fashion Institute of Technology’s “Trend-ology” exhibit during a recent trip to New York, of course we had to go in. The exhibit was billed as “a study of fashion trends and their relationship to the culture.” What we found inside led us to conclude that the basic relationship between fashion, culture and social mood as reflected in the stock market has held for at least the past 120 years. …

The curators began the exhibit in the late 1700s, near the beginning of a multi-century bull market. As the United States was born and the prior major negative social mood trend was ending, skirts were basically on the floor. This is evident in the earliest fashion item in the exhibit.

The social mood trend manifested slowly in fashion during the early stages of the Grand Supercycle bull market. For the bull market’s first 100 years, hemlines more or less stayed on the floor. But in about 1895, as stocks began to approach an interim peak, ankle-length skirts appeared [see Figure 1].

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Figure 1: Hemline Lengths and Market Movements Reflect Social Mood

The exhibit’s creators note that “Fashion inhabits the culture.” And at the turn of the 20th century, the positively trending social mood produced an interesting interaction between fashion and another bull-market manifestation. Skyscrapers represent the expansion of aspiration and ambition, which invariably reach new heights at positive mood extremes. Rising hemlines express a greater level of friskiness within society, another reflection of a positively trending mood. In the early 1900s, these two trends actually came together to create a popular sensation: The Flatiron Building, which opened in 1902 on the back of the same positive mood trend that carried hemlines higher. The building created a serious downdraft at the intersection of Broadway, Fifth Avenue and 23rd Street. Here’s how the book, The City in Slang: New York Life and Popular Speech, described the scene:

The street corner at the prow of the Flatiron Building was famous as the city’s best spot for girl-watching. The famous “Flatiron breezes” sometimes blew up women’s long skirts to the delight of male gawkers. Cartoons, postcards, photographs, and humor about the spectacle of exposed ankles and knees made the corner famous, even in Europe.

The phenomenon was memorialized in a risqué flicker called The Flatiron Building on a Windy Day. The movie came out in 1905, a year before the stock market made a multi-year high. After that peak, the inflation-adjusted Dow failed to make any new headway for another 16 years, during which time skirt heights remained relatively steady. …

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Watch Kendall’s video to learn how social mood trends moved hemlines during the next 100 years. Discover what the current ‘bare’ trend – see-through dresses and skirts – tells you about mood and the market, and where they’re headed next.

Kendall’s video is the best explanation of the infamous ‘hemline indicator’ in its century-long history. You won’t want to miss it.

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