Are we on the cusp of a major long-term bull market in stocks and shares? That’s the theory of author Eoin Treacy, and his upcoming book Crowd Money is the guide to which shares are likely to travel the furthest the longest. (Seriously – the last chapter is a detailed list and chart analysis of over 125 such shares.)
Crowd Money is also much more than this: it represents an innovative new branch of technical analysis. Bringing the crowd theory and psychological insights of thinkers like Freud to the markets for the first time, it shows readers how to understand and anticipate price movements with greater reliability than ever before. (And less reliance on a random collection of indicators.)
It’s a deeply fascinating, encouraging and meaty read – and will be winging its way to bookshelves in October 2013. Earlier this week we had a quick chat with Eoin about what Harriman Intelligence readers can expect to get out of the book …
Hh INTELLIGENCE: Hi Eoin. So what’s Crowd Money‘s ‘big idea’ in a nutshell?
EOIN TREACY: In a nutshell: it’s been a difficult decade for investors in stock markets, what with two major crashes souring perceptions of future potential, but a confluence of major macro themes is now setting the stage for the next secular bull market in equities.
This is likely to persist for upwards of 20 years from 2015. Technological innovation is on an exponential growth trajectory, energy prices should trend lower in real terms from later this decade and the productive capacity of billions of new consumers is being harnessed to boost aggregate productivity.
It might be rocky as monetary policy is normalised in the next couple of years but the stage is set for a major bull market where buy-and-hold investing will return to fashion.
Hh INTELLIGENCE: What is the greatest problem your book helps readers solve?
EOIN: The vast majority of behavioural finance is directed at the academic community who have no experience of the day-to-day cut and thrust of the markets and as a result is difficult to employ usefully. The purpose of Crowd Money is to showcase FTMoney.com’s practical framework which allows investors to utilise the most interesting portions of behavioural psychology to recognise cues in the crowd and more importantly in ourselves.
Many people have become disillusioned with technical analysis because they have relied on a succession of indicators rather than accepting what a simple analysis of the raw price history tells us. Crowd Money contains the first and only exposition of David Fuller’s behavioural technical analysis which has been taught to institutional traders and investors at The Chart Seminar since 1969 and is practiced daily via Fullermoney.com and FTMoney.com.
Hh INTELLIGENCE: What is the biggest mistake that your book helps readers avoid?
EOIN: Everyone knows a man who has fallen in love with his car or a woman who loves shoes and bags. In the same way we can develop an emotional attachment to our investments. This makes it harder to sell and crucially more difficult to buy following a major decline. The disciplined method outlined in Crowd Money is designed to recognise these traits and to profit from them.
Hh INTELLIGENCE: What got you excited about the topic?
EOIN: I’ve been fascinated by crowds and markets for as long as I can remember. The challenge of the market is endlessly fascinating but I’m more excited now than at any time in my career. We are at the genesis of a major new bull market where fortunes will be made by those with the wit to both identify the trend as it begins and the emotional equilibrium to ride it to its conclusion.
Hh INTELLIGENCE: Why is now a good time for the book?
EOIN: We are living through a major turning point for the major asset classes.
The bull market in bonds that has been running since the early 1980s is on life support. When central banks begin to normalise policy it will end. That will necessitate a major reassessment by all investors.
Gold has been a wonderful investment for more than a decade but questions are now being asked about its ability to continue to deliver outsized returns.
Energy prices are still close to all-time highs but supply is beginning to increase and prices should begin to trend lower in inflation adjusted terms from latter this decade.
Major equity indices spent more than a decade trading sideways in a generational long process of P/E ratio contraction and rising yields.
The confluence of these themes suggests we are close to the beginning of a major bull market cycle for equities that could last for decades.
Catching the turns and employing a trend running tactic is where fortunes are made and held onto. Crowd Money is designed to provide you with those tools and right now is probably the most important period we are likely to see in the next decade.
Hh INTELLIGENCE: What would you recommend as 3 other books, sites or authors in this area (other than your own!) and why?
The Wealth and Poverty of Nations by David Landes (1998) – I read this book when I was still at college and it helped form the basis for my view of the world. It details a number of examples throughout history where a confluence of good governance, technological innovation, natural resources and a can-do attitude achieved wonders in terms of human development.
Abundance: The Future Is Better Than You Think by Peter Diamandis and Steve Kotler (2012) – I read this book in the summer of 2013 and its optimistic view of the future is so in tune with my own that I was stunned. The news media tend to portray the most pessimistic view of just about everything but optimism almost always prevails in the end. It pays to bet on optimism. The exponential rate of technological development which persists is going to change our lives for the better in ways we can’t even imagine.
Group Psychology and The Analysis of The Ego by Sigmeund Freud (1922) – I have distilled this book in Crowd Money but it remains one of the pithiest expositions of the tenets of crowd psychology, even after more than 90 years.
Hh INTELLIGENCE: What do you think is the ‘next big thing’ to happen in your sector?
EOIN: The normalisation of monetary policy in the USA and Europe is likely to be tumultuous for stock markets but will provide some wonderful entry opportunities and will presage the beginning of a new secular bull market.
Hh INTELLIGENCE: What are you working on now?
EOIN: David Fuller and I are building a new site to bring the Fuller Treacy Strategy Service into the 21st century. FTMoney.com will launch shortly. I’m also planning my next speaking tour which is likely to take in Singapore, Australia and Hong Kong.
Hh INTELLIGENCE: Lastly … What are your top 5 non-fiction books?
The Wealth and Poverty of Nations by David Landes
Abundance: The Future Is Better Than You Think by Peter Diamandis and Steve Kotler
Group Psychology and The Analysis of The Ego by Sigmeund Freud
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt
The Anatomy of the Bear by Russell Napier
Hh INTELLIGENCE: And what are your top 5 novels?
The Master and Margarita by Mikhail Bulgakov (1967)
Going Postal by Terry Pratchett
Gulliver’s Travels by Jonathan Swift.
Ender’s Game by Orson Scott Card
The Old Man and the Sea by Earnest Hemingway.
Many thanks again to Eoin for taking the time away from checking PDF proofs and cover text to speak with us! Crowd Money is available for pre-order now.