A theme of socionomics is that history does indeed repeat itself. And that it repeats itself in waves of emotion that reflect the conditions of the times. This weekend debuted the second installment of what may end up being one of the biggest grossing movie series of all time -- The Pirates of the Caribbean. Our research suggests that pirate movies are a counter trend phenomenon.
Not surprisingly all the swashbuckling started in the Great Depression of the 1930s -- the premier bear market of the 20th century. MGM had a big hit with Mutiny on the Bounty in 1934. Warner Brothers wanted to do the same and cast then minor player Errol Flynn and co-star Olivia De Haviland in Captain Blood. The movie was a huge success and catapulted both to starring roles. Blood was released in December, 1935. The significance of this is that the Dow Jones Industrial Average had seen its crash low of 41.22 in 1932, barely 11% of its 1929 high at 381.17. But from 1932 to 1937 the Dow recovered to 187.17 about half of the Dow peak at 381.17.
Captain Blood is the story of a British doctor imprisoned for helping an alleged rebel. He leads fellow prisoners in revolt, steals a ship and becomes, you guessed it, a pirate that steals to give to the poor. The point is that pirate films are a counter trend phenomenon. Viewers are literally fighting back along with the hero. Consider the NASD as the proxy for the DOW of the 1930s. The NASD topped at 5,000, fell to about 1,300 and has now recovered to 2,300 or so and is struggling. The NASD is now at about the same mathematical 50% retracement the Dow made in 1937.
Recent history suggests that pirate films do poorly in bull markets but great in bear markets. Geena Davis and her husband produced Cutthroat Island in 1995. The Dow was still headed upward with no end in sight. In the midst of the great bull market, the public had little taste for this $92 million pirate flick as International Movie Database reports it only did about $10 million at the US box office. Davis should have waited for a bear market in social mood. The first Pirates of the Caribbean, Curse of the Black Pearl, cost $140M and took in a whopping $305M. Indeed the results of Dead Man's Chest are in and it has scored numerous all-time box office records. Now that's swashbuckling! And Pirates is happening in the same context of a popular market struggling to regain half its former greatness.
The plans and title for Pirates 3 are now known. We rest our case, on the title of the next and final installment: Pirates of the Caribbean, At the World's End.
We will have to wait until 2007 to see if the title matches the market reality. We are not expecting the world to end, but as we write this, the NASD is indeed struggling, giving back gains as quickly as they were run up. Socionomics suggests that the public is engaged with rebellious pirates in counter trends, not bull markets.
Dr. Dennis Elam teaches in the College of Business at the University of North Texas Dallas and can be reached at delam@unt.edu. |
