By Susan C. Walker | January 14, 2014
Financial expert and author to speak at 4th Annual Social Mood Conference
We have invited financial expert and author Peter Atwater to return for our 4th Annual Social Mood Conference on April 5, 2014, to talk about the way he applies socionomics to business. He first spoke at our conference in 2012 about how changes in social mood affect decision making.
Before starting his own company, Financial Insyghts, Atwater pursued his financial career at a few well-known firms, including JP Morgan, First USA and Bank One. Financial Insyghts advises institutional investors, corporations and public policymakers on how social mood affects decision making and the markets. In 2012, he also wrote a book, called Moods and Markets: A New Way to Invest in Good Times and Bad (published by FT Press).
EWI: What led you to the kind of work that you do now?
Peter Atwater: Seven years ago, after a career in financial services, I found myself advising a small group of hedge funds on the banking crisis. When the crisis ended and all of the pundits started offering reasons for the collapse, I started to do my own research and, in the process, came across Bob Prechter’s work in socionomics. Where the pundits were like the blind men trying to identify the elephant, socionomics put all of the parts together.
Over the past four years, in addition to teaching at the University of Delaware and consulting to money managers, corporations and public policymakers, I have been using the principles of socionomics to explore how changes in social mood drive changes in our cognitive processes.
EWI: Please describe how you are applying socionomics now at Financial Insyghts.
Peter Atwater: I am using socionomics increasingly outside the world of investing, helping companies, for example, think about corporate strategy and working with public policymakers on how rising and falling social mood will affect our communities.
EWI: Why are you passionate about social mood research and socionomics?
Peter Atwater: What I find most interesting about socionomics is how it ties together coincident behaviors across the markets, politics, culture and science. How we act across all aspects of our life is consistent. I use nonmarket socionomic indicators of confidence to support views on the financial markets. In my book, Moods and Markets, I shared these ideas.
Today, I am looking more closely at the role that confidence plays in our decision making. It is how we process our experiences of the past into our outlook on the future. Needless to say, the principles of socionomics are extremely helpful in this research.
EWI: What makes you look forward to speaking at the Social Mood conference?
Peter Atwater: The group is both engaged and challenging. The conference brings together people who are at the forefront of research.
EWI: Based on the topic of your speech, “Using Socionomics in Real Time,” what do you think will make members of the audience think, “I never thought about it that way before?”
Peter Atwater: I think many people are still intimidated by socionomics, and they don’t trust its conclusions, particularly when those conclusions run counter to what the crowd thinks. It feels very lonely. By talking about my experiences with socionomics, I hope conference attendees come away feeling more comfortable using the principles in real time, whether as investors, business leaders or public policymakers.
EWI: One of socionomics’ tenets is that social mood motivates social actions, not the other way around. How does this resonate with your work?
Peter Atwater: I find it is extremely helpful to look at causation backwards from most other researchers. Too many economists, for example, still see confidence as an output not an input. They would be so much better off if they could see the world backwards.
EWI: May we include an excerpt from your book?
Peter Atwater: Certainly. Here’s a bit from the beginning of the first chapter:
From watching CNBC or reading The Wall Street Journal, it would be easy to conclude that it is the economy or corporate earnings that move the market. On any given day you might hear that stocks rose on a better than expected employment figure, while on another day stocks’ fall is attributed to a drop in profitability at Research in Motion or some other company.
Something had to make the market go up or down, and there are plenty of confident pundits and journalists whose job it is every day to tell us just what that specific something was.
At the risk of alienating the entire financial media complex, that something had nothing to do with today’s corporate earnings or economic reports. Although they are interesting facts, what we typically attribute a market move to are much more likely to be effects rather than causes.
Instead of considering how a positive earnings report propels stock prices higher, investors would be far wiser to think about what causes an improvement in earnings and valuations in the first place. Similarly, rather than looking at how falling housing prices might be associated with falling equity markets on any given day, it would be better to consider why housing prices dropped at all.
I believe that markets are not moved by corporate or economic data or even by external events but by us; by how we feel — our mood — and, importantly, by how changes in our mood drive our preferences and in turn the specific decisions that we make every day.
— An excerpt from Chapter 1 of Peter Atwater’s book, Moods and Markets: A New Way to Invest in Good Times and Bad (published by FT Press)
EWI: Thank you for your time, Peter, and we look forward to hearing your talk on “Using Socionomics in Real Time” in April at the 4th Annual Social Mood Conference
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