by Robert Prechter
Updated: December 07, 2017
(Originally published January 17, 2007)
For its 2006 "Person of the Year" cover, Time magazine chose no person in particular but an abstract internet user: "You." Immediately we recognized that this cover, celebrating all of humanity, echoes the "I love everyone" spirit that we identified in our 1985 report, "Popular Culture and the Stock Market," as a hallmark of positive social mood extremes, and thus positive extremes in the stock market. Then we read the following lines in an Associated Press report (December 16, 2006):
It was not the first time the magazine went away from naming an actual person for its "Person of the Year." In 1966, the 25-and-under generation was cited; in 1975, American women were named; and in 1982, the computer was chosen.
Figure 1 shows that each of the years in which the magazine refrained from identifying a particular person or persons followed (by no more than 12 months) a major turning point in social mood and the market. The 1966 cover, issued at peak positive mood, was an expression of inclusionism and a focus on youth. As Prechter's Perspective noted, "In every field, women gain dominance in bear markets," and the 1975 cover, published one year after the December 1974 bottom in the stock market, highlighted this theme by celebrating "American Women." Time's cover of 1982, issued at the end of the 16-year bear market in PPI-adjusted terms, featured an inanimate object as Person of the Year, reflecting the feeling of alienation that attends extremes in negative social mood. The magazine's editors were apparently unable to reach a consensus on awarding the title to any member of humanity. Without doing it consciously, Time's editors may once again be reflecting the mood of a significant turning point--this time a peak--by honoring the collective "You."
[Real estate prices had peaked nine months before this report and underwent their biggest collapse in U.S. history. Stock prices topped nine months afterward and started their biggest decline since that of 1929-32.]
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