The Mystery of Market Movements: An Archetypal Approach to Investment Forecasting and Modelling

Chapter 9Examples of Archetypal Influences on the Formation of Financial Bubbles

When reviewing recent examples of financial bubbles—such as the dot-com bubble crash in 2001 and the US property bubble collapse in 2007—applying Jungian archetypes to how the events unfolded, one can point to the influences of particular archetypes providing the psychological fuel that helped develop and sustain these bubbles. To be clear about the role of archetypes, the actual development of Internet-related technologies and companies and the changing business model that the New Economy triggered are in themselves not a product of archetypes. These technological innovations are unrelated to the reigning psychological environment.

Archetypes impact the direction of the changed perceptions that emerge with the introduction of a new technology. Through prompting a new zeitgeist, archetypes equip the collective human mind with a better perception to handle the changing realities and the accompanying paradigm shift. However it carries the risk to, in the short term, as part of the archetypal energy entering the conscious, lead to excessive psychological manifestations such as the hysteria and panics commonly seen as part of a bubble formation. These investment behaviours reside once the archetype has become fully integrated into the collective mind and a new holistic mental balance has been established.

The dot-com bubble and the US property bubble will here serve as case studies, which are part of ...