In mid-December 2012, I offered the following thought to my clients:
In 2010, Nassir Ghaemi, the director of the Moods Disorder Program at Tufts Medical Center, wrote a book entitled A First-Rate Madness
in which he identifies the consistent behavioral traits of some of great, albeit mentally unstable leaders – folks like Abraham Lincoln, William Tecumseh Sherman, Winston Churchill, Mahatma Gandhi, Franklin Roosevelt, Martin Luther King, Jr., etc.
What interested me about the book was not the specific leaders per se, but rather the fact that substantially all of them came to prominence during major bottoms in social mood. My interest was in why people would naturally follow a mentally unstable leader. What was the attraction?
In writing Moods and Markets,
I spent a lot of time looking for consistent behaviors that exist at market bottoms/bottoms in social mood, and what I concluded was that they all entail some element of deliberate sacrifice. At the bottom, we conclude that we cannot return to what was, and the only choice is forward; and in that process, we take steps to create some kind of certainty in what we see as a profoundly uncertain world.
I offer those thoughts as background to what Dr. Ghaemi identifies as the consistent qualities of those successful leaders with mood disorders:
As Dr. Ghaemi offers, “…studies have shown that those suffering from depression are better than others at assessing current threats and predicting future outcomes. (The rest of us use optimism as a coping mechanism; it makes us happier, but is also clouds our judgment.)” And he goes on to offer similar insights on the other common traits as well.
Put simply, those with high realism, empathy, resilience, and creativity have a far easier timing coping with high levels of uncertainty, and they naturally rise to the occasion.
What brought Dr. Ghaemi’s book to mind this week was the renewed attention on former Italian prime minister Silvio Berlusconi. While I am by no means a student of psychology, it sure feels like many of the traits that Berlusconi exhibits fit with the success factors identified by Dr. Ghaemi’s book. (And Berlusconi is clearly closer than “technocrat” Mario Monti!)
But I would also note how former Prime Minister Berlusconi’s three stays in office tie the FTSE MIB.
Berlusconi: Bear Market Prime Minister:
While Mr. Berlusconi’s initial entry into office coincided with a peak in mood in 1994, his subsequent returns tie very clearly to periods of significant falling mood. To these eyes, should the mood in Italy begin to slide anew, I could easily see Mr. Berlusconi -- or someone with similar traits -- back in office.
Well, here is a short-term update on the FTSE MIB:
Needless to say, if the significant drop in the FTSE MIB since late January is reflective of a comparable decline in social mood in Italy, Mr. Berlusconi may end up surprising the political and financial pundits.
Peter Atwater's groundbreaking book "Moods and Markets" is now available on Amazon and Barnes & Noble.
“Peter Atwater brilliantly provides a framework for understanding both the socioeconomic hubris that led to the great credit bubble of the past decade and the dark social-psychological hangover that has resulted from its collapse. In so doing, he offers an invaluable guide to what promises to be a very difficult and turbulent period ahead as we experience what he calls the ‘me, here, and now’ behavioral tendencies of the post-crash world.” —Sherle R. Schwenninger, Director, Economic Growth Program, New America Foundation
Position in SH and JPM
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