Regarding Boids, flocking and starling murmuration are not the same thing, and though the fundamentals of flocking are understood, how this relates to the emergent behavior of starlings has not yet been explained. From Wired:
At the individual level, the rules guiding this are relatively simple. When a neighbor moves, so do you. Depending on the flock’s size and speed and its members’ flight physiologies, the large-scale pattern changes. What’s complicated, or at least unknown, is how criticality is created and maintained.
Having studied flocking briefly, when I first heard Mr. Dines speak I wondered about the same thing. I believe he is speaking about something beyond fundamentals, he's talking group intelligence or emergent behavior, a market zeitgiest which causes massive movements in extremely short timeframes.
To your other points, James Dines is not a new figure in the marketplace, and while described as "flamboyant" and clearly not above self-promotion, his insights seem pretty dead-on to me. Ultimately, I agree with you though, that at the end of the day you have to follow your own final analysis.
There is no sentiment in the market now since retail investor left and elites now coordinate a puppet show. But one puppet my regain consciousness so the greater fool theory still applies.
Thanks for the great post, Bytesmith. It’s not often enough on this site that the PM Investor is contrasted with the Doer as in the above breakdown .A question I think needs to be asked more on CM::
What market pressures will sustain gold’s value when tje great majority of people are much more interested in bartering necessities like food than trying to amass a store of value they can’t eat? Or to put it differently, if you believe that currency systems as we know them must collapse into vapor, how can you also believe that a commodity as ultimately useless as gold will prosper when the most basic necessities have become very scarce?
I am quite amazed that so many should think this one of the best interviews ever. To my mind James Dines was barely articulate - although he had more sales lines out than the Pacific Tuna fleet. Claiming to be one of the founders of Technical analysis - did he never hear of Charles Dow, Robert Rhea or R.N.Elliott and other early pioneers of chart based analysis? He also likes to give the impression that he is a pioneer in behavioural economics or mass psychology (as he calls it).
R.N.Elliott was on that case more than 70 years ago and the best modern work on herding behaviour in financial markets has been the follow up to Elliott’s work by Robert Prechter. Prechter’s work is far more useful than that of Kahneman and Tversky who won a Nobel prize in 2002 for their work on behavioural economics (Prospect Theory). Prechter explains his work articulately and logically and shows convincingly how cause and effect are so often seen back to front by financial commentators and analysts. Most financial writers attribute daily financial market activity/direction to the news. That is to say, it is an accepted wisdom that the news drives the market ad the market drives the mood. Prechter sees it in reverse - the mood drives the news and is reflected in the indexes because they respond far faster than the economy. It takes time for all those spending decisions in aggregate to be reflected in the economy. These are the decisions to expand a business/to borrow/to buy a new car/to eat out twice a week or conversely to rein in the expenditure/to put off hiring another employee/to pay off debt and so on.
Why do people en mass become optimistic or pessimistic? No one knows but it is a well recorded phenomenon which from time to time (1720 and 1929) can go into optimistic overdrive and result in a bubble followed by a crash and years of pessimism afterwards. The clearest example in my lifetime was the booming economy here in Australia in the early 1980s despite interest rates at 16% or more. People just came out of their 1970s hibernation, threw away the kaftans, the beads and the "summer of love" hippy magical thinking and started new businesses and began hiring. Real Estate took off - investors had no fear of high rates.
Then James Dines gets on to Higher States, whatever they are but clearly Hippy echoes here, and he clearly believes that he is in some exalted state - going so far as to patronise CM. It all sounds like magical thinking to me - something, ironically enough, that Robert Prechter predicted would emerge along with the downward trend in mood!