Sex and the Stock Market

By Vadim Pokhlebkin

Looking at the world through the Elliott wave prism can give you the most unusual perspectives. When you try to interpret trends in modern culture, economies, politics, etc. from the standpoint of socionomics – the science of social prediction based on wave analysis – the results can be quite unexpected. (Check out our Sociotimes.com if you're curious.)

One interesting European trend we picked up on in early 2004 was an embrace of all things sexual. In fact, you didn’t even have to be a socionomist to see that – it was obvious to anyone who paid attention to European news at the time. Here are a few highlights from three years ago:
In Germany, two nationwide “hard-core pornography” TV channels were launched, “breaking a taboo” (Expatica.com.)
In Hamburg’s main shopping district, the German erotica giant Beate Uhse opened Europe’s first women’s erotic boutique, and later added more stores in other German cities.
In England, “Sex had never been more liberated.“ The number of nude scenes on British TV after 9 p.m. had more than doubled since 1999, and this increase felt “about right” to 48% of TV viewers (The Daily Mirror).
The UK was becoming obsessed with “toothing” and “dogging.” Toothing was a “hi-tech sex craze where strangers on trains, buses, in bars and even supermarkets hooked up for illicit meetings using messages sent via Bluetooth-enabled phones” (Reuters). Dogging – or “al fresco sex,” as the BBC elegantly called it – was a social phenomenon where “strangers, mostly middle-class heterosexuals, engaged in exhibitionist sex in semi-secluded locations such as public parks.” The activity was reported in as many as 60% of Britain’s parks and became so rampant that ‘No Dogging’ signs had been put up in a bid to stamp out the craze.”
That was three years ago. Ready for a quick update?
"Sex Isn't Selling at Europe's Biggest Erotica Group," reports the Deutsche Welle. "Beate Uhse is closing its stores aimed at women, and more than two-thirds of its German stores did worse in 2006 than the year before. The once high-flying sex chain has lost some of its potency with both customers and stock analysts."
Unlike three years ago, a quick google search for “toothing” and “dogging” did not bring back a single recent news article about the activities.
You may wonder what this has to do with the financial markets. A lot. Over the years, we have compiled a lot of data showing that sexual behaviors and attitudes, like many other cultural expressions, change with social mood – i.e., the way a society at large "feels." As you know, the state of social mood is reflected by the stock market. And curiously, we've observed that, “promiscuity and the raunchiness of sexual imagery rises” when stocks go in a bear market. Now, remember what European stocks did in 2000-2003? Take a look at this chart of the German DAX stock index, Europe's benchmark:

The deep plunge European stocks took 2000-2003 indicated a proportionate decline in Europe's social mood. The latter may very well help explain Europe's sex fixation that soon followed.
However, since the early 2003 Europe's stocks have rallied, and now that they are nearing their all-time highs, reports say that sex no longer sells like it used to. From a socionomic perspective, this change in the trend that came with the rebound in Europe's social mood – as indicated by the four-year long bull market – is only logical.
But has Europe's bull market returned to stay? A look at Europe's long-term Elliott wave charts can help answer that question.