The Mystery of Market Movements: An Archetypal Approach to Investment Forecasting and Modelling

Chapter 4Archetypal Influences in the Financial Markets

Although Carl Jung never made any specific observations about archetypal influences on the economy or the financial markets, he did occasionally comment on their impact on society as a whole. But the effects he described of activated archetypes on the collective community, such as projections, hysteria, and panics, are easily recognisable features in financial markets.

Financial Bubbles

Financial bubbles are an acknowledged characteristic representing the seemingly recurring folly in financial markets, and occurrences of these bubbles can be traced back to the earliest known speculative markets. The behaviour that causes financial bubbles appears to run counter to the assumptions of human rationality on which most conventional economic doctrine is based.¹ Although investors, financial regulators, and politicians have long been aware of financial bubbles and have at times acted to try to prevent them, while indeed always and indirectly feeding them, financial bubbles still keep occurring, with the propensity to cause grave consequences for society as a whole. It seems that neither an increased investor awareness nor regulatory interference can prevent them from developing. So why, despite the recognition of the risks they bring with them long before they burst, do financial bubbles form? And why do they progress and eventually end in cataclysmic outbursts of hysteria and mass panic despite the increased sophistication of ...