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Five Things You Need to Hear, the Transcript

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It's just like Five Things You Need to Hear, the Podcast, only quieter.

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Cory Bortnicker: Welcome to 5 Things You Need To Hear: The Podcast. I'm Cory Bortnicker, and with me is Minyanville Executive Editor, Kevin Depew.

Kevin Depew: Hey, Cory.

Cory Bortnicker: Kevin, in your column on Minyanville on Tuesday, you talk a lot about social mood and socionomics. What is socionomics?

Kevin Depew: Well, very simply, it's the study of social action that is expressed through social mood. Now, social mood, what do we mean by that? Social mood arises from unconscious, herding impulses inherited through evolution. And these herding impulses are, in fact, patterned. So, socionomics just simply looks at events through the lens of social mood, and uses the stock market as one barometer of that. In fact, the stock market is the best measure of social mood, I think.

It's a little bit controversial and counterintuitive, very difficult for most people to accept, but social mood drives social trends and political and cultural events. Most people think it's the opposite, that events happen and then it causes our mood to change. Like wars, for example; the belief is they happen and then everybody becomes depressed. Or the stock market, out of the blue, crashes and everybody is plunged into a depression.

Socionomics takes the opposite view, that it's actually social mood that paves the way for those events to take place.

Cory Bortnicker: Okay. In your column you presented a chart that details what the conventional view of a causal relationship versus what the socionomic causality would be. For example, there was one attitude that recessions cause businessmen to be cautious - that would be the conventional view, whereas the socionomic view would say that cautious businessmen cause recessions. Can you talk about that a little bit?

Kevin Depew: Sure. I pulled that from a website, socionomics.net, that's the website for the Socionomics Institute. It has a wealthof information that anyone can view, and I would encourage everyone to check it out when they get a chance, look at some of the articles there about socionomics.

But going through that chart, it shows how socionomics is counterintuitive, because we think that, well, if there's a recession, then that causes businessmen to become more cautious. But, in fact, social mood is what drives that risk aversion and caution that translates into, ultimately, recessions. That's just one example. There are many if we go through that list.

For example, the popular view is that a talented politician or leader will make the population happy, but, in fact, it's the population's mood that determines how that politician is going to be interpreted -- what his actions are going to look like.

The perfect example of that would be Alan Greenspan. Alan Greenspan, throughout the bull market and the peak positive social mood years up until the late '90's was viewed as a dynamic Fed Chairman, someone who was very talented. There were books about it. He was called The Maestro. He was lauded. He was on the cover of Time magazine.

No positions in stocks mentioned.

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