|By Pete Kendall, originally published in the March 2003 Elliott Wave Financial Forecast|
The practical thinking that dominates in a bull market carries a “reverence for science.” In a bear market, “magical thinking” prevails. An article from a recent issue of Time captures the dynamic as it is now playing out in pop culture:
The past quarter-century of American popular culture was ruled by the great mega-franchises of science fiction Star Wars, Star Trek, Independence Day, The Matrix. But lately, since the turn of the millennium or so, we’ve been dreaming very different dreams. The stuff of those dreams is fantasy swords and sorcerers, knights and ladies, magic and unicorns. In 2001, the fantasy double-bill of Harry Potter and The Lord of the Rings ranked first and second at the box office, and it’s happening all over again this year. The business of fantasy has become a multibillion-dollar reality, and science fiction is starting to feel, well, a little 20th century. Popular culture is the most sensitive barometer we have to gauge shifts in the national mood, and it is registering a big one right now. Our fascination with science fiction reflected a deep collective faith that technology would lead us to a cyber-utopia of robot butlers serving virtual mai-tais. A darker, more pessimistic attitude toward technology and the future has taken hold. The evidence is our new preoccupation with fantasy, a nostalgic sentimental, magical vision of a medieval age. The future just isn’t what it used to be and the past seems to be gaining on us.
The reason the future is not what it used to be is that the bear market mood is quashing it. J.R. R. Tolkien wrote his first book, The Hobbit, near the bear market low of 1932, and his works became popular in the United States during the bear market that started in 1966. As the bear market wore on, his works inspired the popular fantasy game Dungeons and Dragons. This much higher degree bear market will create even more dragons, many of which are likely to be real. Conquering them is a matter of maintaining bullish thought processes, which is actually very different than the common response of simply staying bullish. It means being guided by reason and the history of past bear markets rather than fear, anger and hope. The herd cannot do this, but disciplined students of the Wave Principle and human nature can.
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