Carl Jung Predicted that Twitter would Change Trading

Well, maybe not, but perhaps he laid the path.  I am stepping out of my element a bit tonight to ramble on some thoughts I have been having about the future related to behavioral aspects of investors and traders, and it starts with a noted, and perhaps controversial psychologist, Carl Jung, a practitioner from the first half of the 20th Century. he was a student of Freud who broke from him with some controversy.  To me Jung is noted for two concepts: the Collective Unconscious, and Synchronicity.

Collective Unconscious

Jung created all sorts of fancy words to facilitate the explanation of his thesis, but the concept of a Collective Unconscious is basically derived from a belief that instinctual behavioral reactions developed over centuries have led to preconditioned patterns of completion of situations.  Jung uses dream analysis from independent cultures and ages as his proof of concept.  Without 12 weeks of hourly lectures let’s assume he is correct for now.  A logical extension of this concept would be that the size of Collective Unconscious would grow over time as more experiences are added.  Let’s turn to the next concept.

Synchronicity

The term Synchronicity was coined by Jung to express a concept about the acausal connection of two or more psycho-physic phenomena.  What the heck does that mean?  My take is that it means that information and thoughts can be transmitted outside of methods that are readily understood and thus explained as ‘para-normal activity’.  Things like ESP, and deja vu fall into this category and it is sometimes summed up as ‘there are no coincidences.’

Social Media

By now you are asking, what does this have to do with investors/traders. Jung may have been well ahead of his time or a total quack, I don’t know.  What I do know is that he thought outside of the box and made others question what they were meant to believe.  By doing so he created concepts that may have started the process that has led to our current state in the market.  Bear with me on this one.  With the advance of technology and onset of social media perhaps the Collective Unconscious is now migrating into the Conscious, A Collective Conscious.  Additionally social media might be strengthening the amorphous concept of Synchronicity by establishing firm causal links.

Technical Analysis

@TA_Trader I feel like that entire volume spike in $BPOP came from my twitter stream

November 11, 2010 2:55pm Twitter feed

Finally I get to the point.  Technical Analysis of stocks has often been described as hokey compared to fundamental approaches, the same way the Jung’s concepts don’t always receive mainstream recognition next to those of Freud.  But for me the onset of social media has created an environment where the Collective Conscious of technical traders has now begun to solidify the causal connection between analysis and price movement in stocks.   As the technicians transmit their collective view through social media, other technicians, algorithmic trading systems and portfolio managers all see the same future and it becomes a reality.   This is not a reality in every stock or everyday yet.  But think about the premise that social media, when reviewed through the prism of 10 years time, may have completely changed the markets.  Is it possible?

I promise back to the charts from here.

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