Peter Atwater - Moods and Markets: A New Way to Invest in Good Times and in Bad

A New Way to Invest in Good Times and in Bad

Peter Atwater

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2013 by Peter Atwater
Publishing as FT Press
Upper Saddle River, New Jersey 07458

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Printed in the United States of America

First Printing July 2012

ISBN-10: 0-13-294721-8
ISBN-13: 978-0-13-294721-3

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Library of Congress Cataloging-in-Publication Data

Atwater, Peter, 1961
Moods and markets : a new way to invest in good times and in bad / Peter Atwater.
p. cm.
ISBN 978-0-13-294721-3 (hbk. : alk. paper)
1. Investments--Psychological aspects. 2. Speculation--Psychological aspects. 3. Business
cycles. I. Title.
HG4515.15.A89 2013
332.6--dc23
2012016000

Peter Atwaters Moods and Markets offers a compelling new framework for evaluating Wall Street and Main Street sentiment and putting it to profitable use as an investor. Behavioral investing is the next frontier, and this book is an invaluable resource for those stock market operators looking to stay one step ahead.

Joshua Steiner, Managing Director, Hedgeye Risk Management

Atwater has written a thought-provoking piece that is a must read for investors of all types, institutional or individual, buy-side or sell-side. He challenges conventional thinking on what drives market performance. Atwaters years of experience in financial services combined with his critical thinking, research, and analysis have produced an insightful thesis that is also fun to read! Whether one ultimately agrees with Atwater or not, every investor will come away with new insights on the markets, an understanding of socionomics, and just maybe a changed approach to ones investing philosophies.

Randy Johanneck, former Chief Risk Officer, J.P. Morgan Private Wealth Management

Peters long and distinguished career in the financial services industry has made him a keen observer of how greed and fear drives markets. This engaging book offers something for everyone: for academics who have long wrestled with why financial markets are more volatile than fundamentals theoretically suggest; for policymakers who still insist that it is impossible to recognize bubbles before they burst; and for investors and risk managers who are always looking for clues as to whether to follow, or step aside from, the crowd. It provides a fresh and more complete answer to how textbook theory suggests markets behave and offers the reader an opportunity to profit from todays pervasive short-term behavior.

Adrian Cronje, Chief Investment Officer and Chair, Investment Strategy Team, Balentine LLC

It is clear that human psychology plays a major role in the fields of economics, finance, and investments. Until reading Moods and Markets, I considered the most fascinating and promising fields of investing to be socioeconomics, behavioral economics, and behavioral finance. But now it may well be socionomics, which takes these concepts to an entirely new and unique level. Atwater writes a lucid, compelling, and engagingly accessible treatise on the topic, supported by many salient historical and real time examples. Most importantly, he illustrates tangible ways to identify social mood dynamics and to both minimize risk and make gains based on them. A must read for every investor and fiduciary.

Michael P. Hennessy, Cofounder and Managing Director, Investments, Morgan Creek Capital Management

I have long been a fan of Peter Atwater since we first worked together over a decade ago and have always found his thinking insightful. Having watched market analysis evolve for more than 30 years, from fundamental to quantitative to behavioral, socionomics is the next frontier. Peters research is meticulous, proving that markets measure moodthey dont make it.

Robert Balentine, Chairman and Chief Executive Officer, Balentine LLC

As a long term investor in the markets, I found two aspects of Moods and Markets that were particularly appealing. The first is that Peter presented his material in a simple format laced with wisdom...sort of like a Buffet annual report. The second is that while I have always understood the need to buy fear and sell greed, I now better understand that they are emotions, while mood leads to longer term bottoms and tops that lead to longer term opportunities to buy and sell.

Bob Smith, Portfolio Manager, T Rowe Price

Peters insights and acumen have provided him a distinguished career and this book is no different. It distinguishes him from the herd. Peters insights within Moods and Markets give you a great view into the window of investing psychology that few possess.

Branden Rife, Head of West Coast Trading, Concept Capital Markets

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

Humans know mood affects their behavior. Peter Atwater opens our eyes to the power of social mood to explain economic, social, and political phenomena. The false security of models and math is unmasked. This book resets your worldview.

Michael Powell, President and CEO, National Cable & Telecommunications Association, and former Chairman, FCC

Behavioral finance meets industry practitioner. Atwater gets it because hes done it. As economic central planning chokes on its academic theories, one of the most credible sources on the business of banking tells you how it all really works, with live ammo.

Keith R. McCullough, Chief Executive Officer, Hedgeye Risk Management

There are four tenets that form the foundation of investing success: fundamental analysis, technical analysis, risk management, and mass psychology/investor sentiment. Mass psychology and investor sentiment are the least understood but increasingly important determinants of market direction, particularly at important inflection points in social mood. Peters insightful book articulates new ways of assessing the markets from this lens and is a very useful guide to investors who are looking for an edge to enhance their portfolio returns.