The Financial Markets Confidence Trick

Featuring Peter Atwater

Peter Atwater left behind a distinguished investment banking career to build his financial consulting operation and he has spent the best part of the past decade examining the role of confidence in markets. The biggest challenge is to understand when the market has reached its top as well as knowing when things have hit the floor and in this interview, Peter explains why some investors are psychologically better equipped to handle it than others. Filmed on June 29, 2017, in New York.

Published on
10 July, 2017
Topic
Sentiment, Monetary policy, Psychology
Duration
61 minutes
Asset class
Equities, Currencies, Bonds/Rates/Credit
Rating
49

Comments

  • V!

    Volatimothy !.

    15 9 2017 22:03

    0       0

    Awesome interview. I share a lot of the same beliefs as Peter. Grant should be nicknamed Goldie, as Gold is his go to question.

  • DY

    Damian Y.

    9 8 2017 11:47

    1       0

    Tell a Bitcoin cult member that it's a bubble and see how they react.

  • JS

    Jeromy S.

    21 7 2017 05:31

    1       0

    Let me start by saying, GREAT INTERVIEW (as always Grant! Even though I did see you get a little shaky when he started dissing gold and I am SOOOO glad that you pressed him. As a viewer, I was asking the same questions. Felt like I was there was with you). Solid performance. I love RTV and the perspective that it gives. However, my personal opinion as a SUCCESSFUL business owner that does NOT believe more government is the answer to everything and another one of those NRA card carrying Americans since birth...the last bit about the coup possibility?!?!?...WOW! Never thought about that.

  • AC

    Andrew C.

    19 7 2017 08:58

    0       0

    Any body got the link to Kevin O'Leary on CNBC - "go long the VIX?"

  • PS

    PD S.

    18 7 2017 19:16

    0       0

    great interview as always by grant, and peter atwater is da man ;)

  • CM

    Chris M.

    17 7 2017 17:50

    0       1

    The only thing I would disagree with is that people need to say "it's not a bubble" for it to be the top. With 3 bubbles in 17 years, believe we are more attuned to bubble identification and less naive that markets run forever. Although some are calling the top, and others say it is not, either way this will not by a signal of a bubble top in this cycle.

  • VS

    Victor S.

    17 7 2017 14:13

    3       1

    Sad report on peter -nothing he said could i understand or convert to make me 10 cents...also any man who does not understand Gold ,with its long history ,and can say"the fed follows the market setting rates" is really not in the business! He Should be a professor at Columbia U. The MARKET does not keep fed funds at zero for 7 years while CPI is 1.7% compounded. From 1926-2008 FF trade at 100 bps ABOVE CPI not below?

  • JL

    Jim L.

    15 7 2017 05:46

    5       3

    Please... more actual money managers/traders... ie risk takers. I'm not suggesting there aren't many other people with extremely interesting insights, I'm just asking for more of the risk takers. With all due respect to Peter, he isn't a risk taker. If you don't have money behind your ideas, I am sceptical at all times. Next I'll see the permabear Jesse Felder interviewed. One of the biggest frauds out there. Constant bearish scepticism does not equate to intellectual ability and most certainly doesn't equate to investment success in a ripping bull market. You might hate the bull market but it doesn't have to go down because you hate it.

    PLEASE... more of the Carson Block's, Lacy Hunt's, Kyle Bass' and many of the other great interviews you have done with actual risk takers.

    Rant over.. thank you

  • AL

    Alex L.

    14 7 2017 02:19

    2       0

    My mom just told me the other day she had learned about the FAANG acronym... this interview made me completely reconsider the meaning of that.

  • NA

    Nickle A.

    14 7 2017 01:41

    1       0

    Absolutely Brilliant. One of the best of 2017, by far. Will be great to bring him back early 2018. Bravo G&R!

  • CY

    C Y.

    13 7 2017 20:16

    1       0

    what a prescient conversation. Tesla gets slammed right after the conversation gets released.

  • HB

    Heini B.

    12 7 2017 15:36

    3       0

    Really enjoyed this and as a side note; my father asked me about Bitcoin the other day

  • VP

    Vincent P.

    12 7 2017 01:51

    3       0

    Well ok, if a 260% upside move off the lows is a bear market rally I'm all in!! Sounds like a frustrated Bear who missed the move to me. Agreed that confidence, when shaken will trigger volatility and new levels in the market but to suggest a military coup in the US is a little outrageous. Although, if the UK can possibly have 3 elections in 18 months perhaps anything can happen. The way thing are going in DC, it's not inconceivable to have a recall vote following a change in the Constitution!! Nuts hey????

  • MR

    Mark R.

    11 7 2017 20:42

    8       0

    So mood drives price. Not the other way around.
    Taking that point of view you can gain valuable insight only if you accurately gauge (measure) mood. Talking in generalities about mood does not seem helpful. Often we point to headlines that in hindsight appeared to be the signal that the “top is in”. I wonder about all the silent evidence that we do not see or hear. What I mean by that is all the headlines that could well have, in hindsight, been chosen as the signal of a top, if a top had occurred at that time. As humans we look for reasons and correlations and hindsight gives us plenty to choose from.
    Peter’s proposes that we need to ignore emotions and be objective by establishing criteria and not letting our emotions influence our actions. I don’t see how that is possible for a human. Trying to be “objective” we believe that we are using rational thought when in fact our thinking is still heavily influenced by our intuition. And, for me, that seems to get worse with age. I have gotten so risk adverse in my old age that I often feel a sort of paralysis.
    What I would like to have seen from Peter is how he “objectively” identifies mood. Some sort of concrete measurements that can charted over time. Show me a graph!

  • DM

    Daniel M.

    11 7 2017 16:15

    1       0

    Is his suit doing that in real life or is that just poor camera work?

  • BB

    Bob B.

    11 7 2017 15:16

    2       1

    #1 Rule Don't Fight the Fed
    #2 Rule See Rule #1

    The ideas he is proposing may eventually happen but what about the idea of first a melt-up in the market. The Fed will not give up and they still have plenty of ammo. Seems like right now there are more people looking for the melt down in the market and usually the crowd is wrong. Or hey maybe I am just listening to the smart people. :)

  • TH

    Timo H.

    11 7 2017 06:19

    16       0

    This was a useful reminder of some basic facts. Numbers don't mean everything and the psychological factors really determine the turning points. This time, we may well have the biggest confidence bubble ever at hand.

    To me it looks like the confidence the market has today is of sick nature. Everybody seems to be chanting like this: "Yes, we're in uncharted waters. There will be big trouble. Our standard of living is declining. Our pension system is toast. Our kids can't afford buying a house. Etc... However, whatever happens, the central banks will save us. There will be money for everyone."

    If we get any increase in inflation, this sick faith in CB omnipotence will be gone overnight. The market will realize all at once, that what we thought was a friendly fireman putting out the mysteriously started fire, was actually the arsonist. That's what I call "loss of confidence."

  • KA

    Kevin A.

    11 7 2017 05:10

    0       0

    NO F'N WAY! Did Peter just say, "You have to buy gold, because... jock itch"?

  • KA

    Kevin A.

    11 7 2017 04:19

    2       0

    Here we go! Almost 3 years in and someone on Real Vision mentions Socionomics. But what to do with it... Learn It, Live It, Love It :D

    How else would determine that the entire crypto revolution has taken place in large degree wave 5 and is a result of technological exuberance. Or that record spec positions in PMs likely confirm a bear market rally. Or that jeggings means the skirts have completely disappeared (my favorite... for those under 150lbs)

  • PN

    Paul N.

    11 7 2017 01:38

    2       0

    Shout-out to @StockCats!

  • RA

    Robert A.

    11 7 2017 00:26

    1       1

    This was a great one and comes at it all from a very interesting angle. Loved the Jesus Christ Superstar analogy to Hamilton. Tongue in cheek alert, but if the Populists might go for a Military (General) I assume, why not Elon Musk or Jeff Bezos stepping in----Trump steps down to save his Brand and empire and Elon or Jeff step up to save his empire in Elon's case and to hyper expand his empire in Jeff's case.....and, of course, to save the people.

  • RA

    Robert A.

    11 7 2017 00:26

    0       1

    This was a great one and comes at it all from a very interesting angle. Loved the Jesus Christ Superstar analogy to Hamilton. Tongue in cheek alert, but if the Populists might go for a Military (General) I assume, why not Elon Musk or Jeff Bezos stepping in----Trump steps down to save his Brand and empire and Elon or Jeff step up to save his empire in Elon's case and to hyper expand his empire in Jeff's case.....and, of course, to save the people.

  • DS

    David S.

    10 7 2017 23:12

    9       2

    I rarely give a thumbs down, but I did this time. Mr. Atwater's confidence indicators are not different than Buffett's buy when everyone is selling, sell when everyone is buying. A more likely political solution in the US will be middle of the road Republicans and Democrats will work together to get the peoples' business done. A five year bear market rally? Europe is scared of a populist uprising after all the problems they see in the Trump Presidency. The US military is popular and competent, but I do not think that they wish to run a bipolar electorate . They are smarter than that. DLS

  • DS

    David S.

    10 7 2017 22:46

    1       1

    The free market nominal price is the only objective price. There is, nor has there ever been a real price. DLS

  • M

    Mark .

    10 7 2017 22:14

    8       0

    That was excellent. Having said that, I don’t get why he doesn’t have a fat position in gold. If you have a level of real interest rates that doesn’t misallocate capital it breaks the government and the government keeps piling on debt going into a demographic disaster every single day. Isn’t gold pretty safe here? What else is a good buy right now?

  • JV

    Justin V.

    10 7 2017 21:52

    5       1

    Paul reminds me of Martin Armstrong. Get him back please Grant!

  • AH

    Andreas H.

    10 7 2017 21:31

    5       2

    Great Interview, great framework, but I come to totally different interpretations. Confidence is extremely low, read Jim OShaughnessy and his 20 year mood swing analysis of the last 200 years. We got a confidence low especially on value stocks right now, it is 1982 all over again and the outrage I get here on RV since Feb 2016 being bullish tells me I am right! Same with selling bitcoin, the outrage tells you a lot! Same with Trump, compare to Reagan (same bad numbers...)... with Trump the outrage is the worst, so what does that tell us?

  • MM

    Michael M.

    10 7 2017 21:09

    15       0

    these market guys who like to look back centuries in terms of markets need to look back centuries in terms of demography. We are in an unprecedented era of demographic change, the idea we can have human beings as interchangeable economic units as if we were a standard futures contract needs to be seriously evaluated. In my humble opinion this is not taken nearly seriously enough.

  • RS

    Richard S.

    10 7 2017 20:42

    6       0

    I'm as bearish as anybody - and enjoyed the presentation immensely - but "Bear Market Rally since 2009 ??? new highs in all indices ?? Really don't get that ??

  • GG

    Gerald G.

    10 7 2017 20:22

    7       0

    I really hate to say because I (like most people) like to handicap a direction but... the paradox of this "reluctant" bull market (where confidence is low yet monetary distortions are forcing the market higher) might mean the worst of all worlds... protracted sideways stagnation. In that scenario being long or short are BOTH loosing strategies (and don't markets always try and do the thing that costs the most people the most money)? I sure hope this isn't the case.