Category Archives: Socionomics

Socionomics, a study of made of repeated patterns in human behavior which contribute to the changes in the environments, such as stock markets and economies as well possible events such as wars and disasters.

Animal Spirits, Bubbles, Mania’s and Market Peaks. Daniel Mankani /24th December 2017/ Daniel Mankani – Animal Spirits is a late stage market event in which bubbles get created by a herd Mania in a collective illogical intuition { cognitive bias } culminating into market peaks and eventually its bust.

Animal Spirits.

There comes a time when rational thought takes a backstage and excessive risk-taking behaviour trumps, Alan Greenspan first referred to this as “Irrational Exuberance” in the 1970’s, although he may have got it wrong this first time around. Today this has now become an important part for all students of Behavioural Finance.

For the most part, Humans are expected to be rational in the management of their affairs. They plan and coordinate their affairs to the best of their abilities for self-preservation and thereafter their goals are enhanced for even better positive potentials and outcomes by the deployment of their self-capabilities.

“Nothing infuriates a man more than the sight of other people making money.”

This risk-taking behaviour is inherent in all of us. A parent takes the risk to provide for a baby, an entrepreneur does the same when he goes into business and A trader wages his bet based on his own statistical understandings with attempts to tweak outcomes to his advantage.

Yet, there comes a time when all rationality is lost. Driven by either fear or greed, intuition begins to drive decisions of oneself, which in itself is without any conscious reasoning and simply an output and/or recollection of cognitive bias.

With participants overestimating self-capabilities and potentials, a deviation from the norm occurs and rationality in judgement takes centre stage, whereby inferences from other people and situations is drawn upon in an illogical fashion.

I know the price I am paying is absurdly high, but somewhere out there is a greater fool than I am. Who will when the time comes pay an even higher price.

Humans like Animals find safety in collective thoughts, a sense of stability prevails within the herd and like every herd headed to the slaughterhouse, the leader of the pack has to be in confirmation or else he loses his position as a leader, he is bounded by this collective thought and the pact follows him as a means to collective bias.

Animal Spirits is a late stage event that occurs in every market and in 1998 we documented the story of the Internet boom and its subsequent bust. It’s a very interesting read and demonstrates how irrational collective herd behaviour leads to the slaughterhouse.


The Federal Reserve has consistently fed one bubble to another since the start of the millennium and just like in 1998 with the bailout of “Long-Term Capital Management”, resulting in the Nasdaq rallying from the lows near 1000 into 5000 all in a matter of fifteen months.

LTCM Bailout, Market bottoms and huge rally, the greedy george soros also turns long.

This upturn was all that what was required to bring all the naysayers of the times into compliance and once the greatest fool of all has gone long, the market peaks and ends in tears for all those without rational thoughts, herds into the slaughterhouse.

More importantly what was missed out then and is valid even today is the times prior to the March 2000 Peak. The bust of “1997 Asian Financial Crisis” had very little positive economic growth, present were the depression like conditions with negative GDP’s across the Asian region, elsewhere Russia was facing pressures on its sovereign debt and Europe was in the midst of adjustments welcoming the Euro.

All these culminated into capital and resources pouring into the “Technology Bubble” as a be it end all.

Bankers quit their jobs to join start-ups, Underutilized resources such as “Office Spaces” were offered to start-ups for a share of their equity, Companies added an “E” or “I” to their business names, everything technology related became a buy. Irrational Thought driven by Greed or Fear became prevalent all across the board. See the chapter Greed.

All those without any understanding of the inner workings of technology were now on board. Today its no different, there are Parallels in the economy, mathematical relationships and equations we can draw upon.

A bubble is created when irrational thought and outright stupidity are visible to the naked eye and yet it remains as a doubt not to be questioned due to the collective bias of the herd, while the herd in itself is together for the very same reason and illogical intuition drives human behaviour to confirm. Today we have bitcoin.


Most Market Mania’s have almost universally similar characteristics, Beginning with this time is different and easy money mentality. There is almost always no underlying valuation attributes or anchoring to any fundamentals. Early participants overestimating everything with overblown claims of growth stories and infuriating those who have yet to participate, a fear of missing out prevails greatly. 

Then out of sudden a period of Irrational Exuberance prevails with a decline in credit standards leading many to borrow with Ponzi Financing fueling the bubble to unsustainable levels. In a self-fulfilling prophecy, higher prices bringing in even more participants leading to even higher prices, eventually surprising even the early participants, who then refuse to reinvest their Rich returns and proceeds. Finally culminating into the bubble bursting where the latecomers almost always end up holding the baby.

Further Reading.
Signs of the Euphoric. The Bust is almost near!
BITCOIN – A Fraud and Ponzi in a Disillusioned World

Get to know us.


Technopreneurship – The Successful Entrepreneur in the New Economy – Daniel Mankani. Published 2003. Pearson Education Asia – All rights, copyright reserved Daniel Mankani { ISBN0-13-046545-3 }

Chapter The Greed >>> Technopreneurship-The Successful Entrepreneur In The New Economy.

Back to the Beginning.
BITCOIN – A Fraud and Ponzi in a Disillusioned World:
The Greed:
The Hope:
The Ignorant, Zombies:
Perception vs Reality:
Chart Patterns:
Introduction to Technical Analysis.


Revolutionary Transformation Ongoing.
– Global Economic Collapse January 18, 2016

INDIA NIFTY – Has 5400/5420 in view. This guy is not falling!

The last few sessions in the markets have been breath taking, Just a few days ago on FRIDAY, HOPIUM rose and the markets became once again happy go lucky!. Despite the geo political arena getting hotter, American Ships in the straits of Hormuz, plus IRAN completing their war cry exercise and demonstrating its war capability, and selectively saying, “Don’t mess with me, I have the fire power”, its possible, the USA now discounts the IRANIANS for all their empty threats.

Last year IRAN warned “No ships shall pass my seas” and a US SHIP turned back and headed further away, with that, IRAN said “IF YOU COME THIS WAY AGAIN!, I SHALL TAKE CARE OF U!.  A week later, when the SHIP returned, IRAN did nothing.

A whole lot of empty promises and lack of management displinary skills of IRANs arm forces, indeed raises many doubts, but then again, they have shown more than once, their inefficiencies, an example how they were not able to handle the naughty behavior of STUXNET or when their mililary depots blew up, due to “improperly of storage weapons” techniques.

A whole lot of questions are always raised, when it comes to IRAN, the sabre rattling has started to become boring, this could be the underestimation both parties could make, leading up to the escalation in world war three.

The USA may just push it further and strangle the IRANIAN even more, before the IRANIANS make the first move, due to fear attack.

indeed escalate world war 3, and the IRANIANS will indeed give them a tough fight, which will solve USA’s economic problems and the Industrial War Complex will once again have their way.


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Global picture emerging

Quote from the web

“The picture that’s emerging is pretty clear: there’s a global slowdown of significant proportions,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages about C$100 billion ($97 billion) of assets. “Commodities are simply reacting to the facts as they are on the ground.”

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A week to Iran Sanctions, July 1st the Date.
EU to implement sanctions against Iran July 1 as planned
Brussels (Platts)–25Jun2012/1125 am EDT/1525 GMT

The EU’s sanctions against Iran — including a ban on oil imports and a ban on the provision of insurance for tankers shipping Iranian oil — will come into force as planned on July 1, EU foreign ministers said Monday.

The Response,

“They need the propping up of oil price, Russia has oil at 150$ on the barrel in its budget, with oil trading at almost half of that, and public dissent at historical highs, Russia needs high oil prices to quell any disharmony at home. A war is inevitable”. -dtrader

Bearish forces at work!. Nifty 4500 on the cards?

Last year in Jan, near about 6300 on the Nifty, We advised a short, prior to doing so, our team visited Mumbai, saw the construction all over, saw the folly of the richest man in India with his tall billion dollar building as his home, and witnessed the hope in the AIR, “India Shining”. All this presented a peak for the markets.

Efficiency in India is non present and as the euphoria of cheap money nears its end, Indians slowly realize the days of cheap money is over. In Economics its hard to see, how growth can be delivered by cheaper code writers that India Offers, or how this country could sustain itself on a global scale, from self sufficiency the country today is a net importer, its deficits are evidence on the Indian Rupee.

So after this trip on the day out, at the airport departure terminal, we headed to the smoking room of the airport. In Airports smoking room’s, usually tips can be obtained on how the country looks in the eyes of departing travelers and more often than not, it’s a worthy observation. A gentleman travelling back to the middle east asked us what we did. And we highlighted we made a quick study of the situation on the ground and believe that the up move of India is over, {we were short, a good size at 6000 areas}!.

This gentleman quickly became agitated and highlighted how the whole world was in Shit, including the middle east and how India will rise up to become a super power in the years ahead. We held back and gave him a grin and walked away. If it acts like a duck, quacks like a duck, then it is a duck.

Now if indeed we are right, how will it play out!

The debt exposures of the government and corporate’s, which is hurting, especially those who borrowed FCCB’s and in various foreign instruments will come to roost, devaluing the Indian Rupee even further, technically our charts indicate the region of 62-64 before any meaningful correction on the INR, while on the first phrase of devaluation the noise from government officials and verbal interventions will provide initial level support to the currency, but verbal interventions can only do so much.

Once additional momentum picks up to the downside and political dissents ramp up their voice on inflationary pressures, the stock markets will start to recognize and high frequency bots will be unable to continue providing the fake liquidity that is currently present, propping up markets is a strategy and belief shared by greenspan and bernanke, they believe higher stock valuations, provide a feel good factor and eventually reflect the true extend of the economy, this is indeed false.

India’s RBI governor is also trying to act like them too, which will make Inflation easily accessible.

Their theory is flawed, it doesnt reflect anything near the true extend of the economy, in reality the economy is suffering, real estate values are held up as in stocks, due to the weaker rupee, which effectively makes the nifty trading at 4000 levels in real value terms, since the INR is almost 20% weaker than before.

Does anyone think, The same level of security and safe keeping as in gold, real estate or any other asset class that holds it value, than fiat currencies and shares will be in for a surprise.

The situation on the ground today is amplified ten times than 1991, as growth levels expanded to the upside, similarly their corrections and problems are also amplified. For those, who want to know better, are advised to take a look at Malaysia, Thailand, and Singapore (1997-2002) stock market charts vs Fx devaluations to reach their own conclusions on India.

Investors cast doubt on “end of world” hedge strategies

Investors cast doubt on “end of world” hedge strategies

An office worker talks on his phone as he looks the stock board at the Australian Securities Exchange (ASX) building in central Sydney June 15, 2012. REUTERS/Daniel Munoz

LONDON | Fri Jun 22, 2012 4:24am EDT

(Reuters) – Hedge fund investors have voiced their concerns about complex funds designed to protect against major market meltdowns, just as fears of a break-up of the euro-zone have spurred huge interest in these products.

So-called “tail risk” funds, also known as “black swan” strategies after the popular book by Nassim Nicholas Taleb, are supposed to hedge against rare but dangerous events, such as the market sell-off following Lehman Brothers’ demise.

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Didn’t We Learn from Facebook? IPO Filing Shows Market Is as Sleazy as Ever

From Yahoo: Didn’t We Learn from Facebook? IPO Filing Shows Market Is as Sleazy as Ever

Just a month ago, Facebook (FB) was the ”poster child” for IPO reform. Its public debacle triggered countless lawsuits, Congressional probes and regulatory inquiries, and cast a cloud of doubt over Morgan Stanley (MS) – who brokered the deal, and the Nasdaq exchange (NDAQ) that botched an orderly open. It seems the only good thing being said about the Facebook IPO was that it just might mark a turning point for a deeply flawed system.
I hate to break it you, but it’s not happening.New federal filings show that is looking to become the first internet company to retest the waters of the IPO market since Facebook’s May 18th debut. There’s only one problem; six weeks ago AutoTrader insiders borrowed $400 million in order to turn around and pay themselves a one-time dividend in the same amount. I call it, cashing in before you cash out, while my co-host Jeff Macke is more blunt.

“There’s nothing illegal about this, it’s just kind of scummy,” he says in the attached video. “They’ve made it a lesser company and immediately after doing so, they’re pitching on to the public.”

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Inequality: It’s Even Worse Than We Thought

Inequality: It’s Even Worse Than We Thought

The current debate about rich and poor — the 1 percent versus the 99 percent — is a bit misleading because the evidence usually is data about income, not wealth. Looking at wealth would make the comparison even starker.

There are some nice deals to be had in the income tax code these days, but most wealth accumulates and passes from generation to generation with no tax at all. Warren Buffett (who has selflessly taken on the role of all-purpose tape measure in these matters) is worth $45 billion or so. Do you think that all of that $45 billion, or even most of it, has appeared on any Form 1040 on its way to the cookie jar? Even at the special, low 15 percent rate the U.S. insanely confers on capital gains?

Unlikely. Much of that $45 billion is unrealized capital gains — increases in the value of Buffett’s stock that have never been cashed in, and therefore have never been taxed. I’m not saying that unrealized capital gains should be taxed (although it’s a thought). I’m just noting that you only pay income tax when an investment is liquidated, and very wealthy people don’t have to liquidate until they actually need to spend the money.

For most of the very rich, this time is never. When you die, any unrealized capital gains disappear for tax purposes. Your heirs, if and when they sell, pay taxes only on any increase in value since they got the money. And there is no estate tax at the moment on estates of $5.12 million or less.

Really Skewed

The Federal Reserve released new numbers on Monday. Unsurprisingly, wealth distribution is even more skewed than income distribution. In 2010, the median family had assets (including their house but subtracting their mortgage) of $77,300. The top 10 percent had almost $1.2 million, or more than 15 times as much.

But the headlines — and rightly so — went to the dismal fact that household wealth has been sinking for all categories of Americans. As I said, the net worth of the median family in 2010 was $77,300. In 2007, the net worth of the median family was $126,400. That’s a drop of almost 40 percent in just three years. (All these numbers are corrected for inflation.)

Characteristically taking the longer view, the New York Times led with the fact that household savings were back to where they had been in the early 1990s, “erasing almost two decades of accumulated prosperity.”

Most of the lost household net worth of recent years is due to the drop in housing prices. This is comforting, in a way, because the price of land and things built on land — and what, ultimately, is not? — are different from the price of other goods and services.

Let me tell you about my favorite economist, an indulgence I allow myself every couple of decades. (The last time was 1989, pre-hyperlink, unfortunately.) He was an American named Henry George, who died in 1897 at the age of 58. If you took economics in college, there might have been one sentence about him in your textbook. He once ran for mayor of New York. (Fancy that. He lost.)

George would look at our present situation and ask: In what sense were we richer three or four years ago, when the exact same housing stock sold for up to twice as much? In what sense are we poorer now? Land is special because, as Realtors like to remind us, they aren’t making any more of it. This means that you can get rich owning land without doing anything productive with it. (Henry George: “You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon, or down a hole in the ground. …”) The natural increase in population will do the trick.

Tuna Fish

This is also true, to varying degrees, of other investments. It is true to some extent of any product that can’t be easily and quickly reproduced. It is somewhat true of houses, once they are built. (As Tolstoy didn’t write, “Cans of tuna fish are all alike, but every house is a house in its own way.”) But it is especially true of land.

My Bloomberg View colleague Clive Crook claimed recently to be a “supply-side liberal.” So was Henry George. He was as concerned about income equality as the most bleeding-heart liberal and as concerned about economic growth as the noisiest supply-side conservative.

George’s solution to everything was to eliminate all taxes on working, saving and investing, and to put the entire tax burden on unproductive land, which can’t escape the tax by moving. There are problems with this idea. But it’s provocative.

I don’t have room to do George justice, but take a look at his masterwork, “Progress and Poverty.” For an economics tract, it’s actually a fun read. And, yes, you’re responsible for it on the final exam.

(Michael Kinsley is a Bloomberg View columnist. The opinions expressed are his own.)

Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View columns, editorials and op-ed articles.

Today’s highlights: The editors on measuring methane leaks and Putin’s attack helicopters in Syria; Caroline Baum on the Federal Reserve’s next move; William D. Cohan on Jamie Dimon’s day in Congress; Ezra Klein on Venture For America; Nicholas Polson on recognizing smart money; Amar Bhide and Christopher Papagianis on fixing money-market mutual funds; Jonathan Reiss on improving regional Fed boards.

To contact the writer of this article: Michael Kinsley at [email protected]

To contact the editor responsible for this article: Michael Newman at [email protected]

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The New Trends

The New Trends – 1st Quarter 2012.

Lets analyze what are we witnessing thus far.

1. In the previous quarter, consumer spending was still bid based on availability of cheap deals and deal based sites were the master of the day, it seems the deals sites in the current interim have now started to bleed, with lack of availability of any new loss making deals, which didn’t go well with merchants and with reluctance of merchants and retailers to go down this path, the deals have not only dried up, as they realize the very little value additions by deals based websites to their business.  Case in point, low numbers of groupon and various other deal sites.

The consumer is more cautious and will not pay for anything that he doesn’t need and involves in extensive research in an event he needs anything, be it a product or service. A tight market in general, with uncertain conditions, inability to determine tomorrow. Therefore save for a rainy day, mentality presets.

2. Volume has never been so bad in the markets, bearish bets have declined to almost a five year low, with the Vix breaking down below 15 yesterday, the same remains with retail sales figures across most markets, yet somehow government reports differ, on the dry bulk market, shipping is in a very bad shape.

The above two factors are sufficient to suggest that growth is missing in this stock market rally and till that is fixed, it hard to see how else will the situation turn around.


HERD MENTALITY 15 2008/       In today’s day and age, the most important socialnomics lesson is Herd Mentality. We simply can’t have enough of what the next individual is doing. The place to start to understand our affliction is in the stock markets.We simply can’t stop creating enough Bubbles.

The Subprime Crisis first made notoriety in August 2007, at a time when bullish indicators were already at the extreme. However, despite the subprime announcements and fears from industry veterans and hedge fund professionals (George Soros, Buffet, etc), the market defied all odds and continued to move to new highs. In October 2007, so bullish was the herd that they convinced the “best traders of all times to go long”. Temasek and various sovereign funds went long in the face of adversity, calling it a trade of a lifetime.

Here was a pattern emerging: “How the best traders of the world were making the worst trades of their times”. Similarly, this has happened before and always will – in end 1999, just by the DotCom Collapse, when Tiger’s Fund Julian Robertson, George Soros and even Value Warren Buffet went long tech stocks before their demise, after being short Nasdaq in general for three years in a row, this pattern of Herd Mentality is so strong that in 1998, the Monetary Authority of Singapore and Taiwan’s Central Bank publicly announced that they were moving most of their reserves from other currencies into US Dollars. This is when they initiated long carry Yen traders at 130/145 ranges just two weeks before the Great 20% Collapse in US/JY to 90 Yen per Dollar. So it isn’t surprising to note that this time around, they are caught on the wrong foot again.

It is this Herd Mentality that makes conservatives into extreme gun-slinging, risky, adventurous traders, and this change in perception is created by a very strong emotion known as greed. Society tends to create hidden benchmarks of expected performance from a fund/trader/investor/individual. This benchmark is usually driven by GREED or FEAR; fear of losing out to the next and greed of making more than the next. HOPE only kicks in when either of the perceptions go wrong. So in emotional studies, it would be that hope is the consolidating phase before the turn back into fear or greed.

Just as the markets are flirting around with the lows, a look at the charts of the DOW/SP/Nikkei or any of the world indices clearly demonstrates that consolidation is underway. We have not had significant lower low, lower highs for the past three weeks, but rather a swing up to the highs and a swing back down, on both sides. There is fear – fear of losing out a bottom, fear of not having enough cash during the down turn. Interestingly the market closed midway of the week, suggesting hope that the G20 and the weekend will bring about some relief.

Somehow it seems that the herd is dumb, stupid and has no mind of its own. Emotions run so strong that the animals don’t looks up and see the reason of running – they do not know the reasoning of the run. Is it to a slaughter house or towards greener pastures? One thing however is sure – the only way to profit from the markets is through contrarian approaches. In all probabilities, 80% of the time, results should end up favorably albeit at times after a prolonged wait. But the nearing turn always comes when the “best traders of all times initiate the worst trades of all times” and you don’t have to worry, they usually announce their trades with a Big Bang!

Recent Announcements:

  1. Fed Bailout 700B (BEARISH)
  2. Buffet says buy American (NEUTRAL)
  3. Jim Rogers, Long Commodities, China. Short US (Analyst view not fund)


  • Of the above, it seems Jim has three options open and as usual, he will emerge in time to call his trades Right.
  • Fed changes plan of not investing in Toxic assets anymore. They seem to have seen the light!

Good luck investing!!!!