Chapter 1 – Introduction


For many years I have wanted to write a book about the stock market. I love writing, researching and sharing my thoughts, but I have been waiting for a unique inspiration to demonstrate a novel way of looking at a subject that has seen ink spilled across millions of books with little new wisdom to help us understand the complexity of the capital markets. Every day we are overwhelmed with more and more information in the form of newsletters and blogs that in most cases provide more noise than useful input, to quote Einstein “Not everything that can be counted counts, and not everything that counts can be counted.” In the Market Complex you will be exposed to a completely new way of thinking about the markets, you will go deeper than you have been before deep into the mind of the market and her participants, and through this journey you will hopefully gain insights into your own psychology and those with whom you watch on TV or read about in the press, and of course those collective buyers and sellers you engage with in the stock market. Some of these inner revelations may surprise you and may even be quite shocking.

Another factor that I wanted to have in place to make this work original and something I am proud of, is for the process to be as organic as possible; I didn’t want it to be forced or governed by externally created deadlines, monetary reward and publishing bureaucracy, in essence I wanted to be me. I choose this word “me” carefully, as you will discover in the pages that follow I am a man consciously aware of my teleological[1] mission.

In planning how to write this book with the above two principles in mind I considered many different strategies. The one that held the most appeal was to go to an isolated beach town along the Australian Gold Coast and lose myself in my writing, have no contact with the outside world, save for family visits on weekends and become the story of this book. I quickly shelved this plan when considering how my wife and close relatives would laugh me off as having lost my mind. They know I am intrigued by the “no worries mate” hippie beach culture of Bondi Sydney, but me writing a book at a coastal village even for me is taking things too far. One thing for sure they need not worry about is me growing dreadlocks – if only. In search of an alternative I came up with a compromise which is probably the best solution for the first draft, and is one that I think sits well with my open personality, but also confronts a shadowy side of my personality that is less open to critical dialogue. The solution I have chosen is to publish the book one chapter at a time in full view of the public and my critics on my website Sefirot Capital. There will be no deadlines other than those that are self-imposed, and judging from experience the more people that connect with the “Market Complex” the stricter will be my deadlines and my drive to complete the project. The feedback along the way will also ensure that the final product will be better for the collaboration. For the record I wrote the first word of this book on Monday the 27th October 2014 and I believe this project will be completed anywhere from two months to the end of 2015.


The stock market may be climbing steadily for no apparent reason and the next moment it can be falling sharply for no particular reason. Other time’s markets behave exactly as you would expect them to, giving us this tremendous feeling of control, as if somehow we have a scientific explanation for the world of finance. From these misguided beliefs that markets follow a verifiable scientific path comes the foundation for one of the world’s greatest frauds, the forecasting “Fortune Telling” industry that central banks, government treasuries, investment banks, research houses, software vendors, money management sector and the blogger community as a whole perpetuate.

The high priests of the finance industry put forward a number of impressive theories, most of which I have studied fairly extensively and none of which leave me comfortable that we are adequately explaining the behaviour of collective human purpose. We have the incumbent efficient market hypothesis (EMH) school, and the fast growing, but relatively new, behavioural finance (BF) school knocking on the door, poking holes through what many feel to be an impenetrable truth of market efficiency. As with all major bodies of thought, there are derivatives which take different approaches working under the umbrella of the central thesis. In a later chapter we will take a critical look at some of these theories.

Along this exploration of learning and practising as a professional money manager I confronted my own inner demons with an existential crisis about my chosen profession and whether we were all “fooled by randomness” as the brilliant Nassim Taleb puts it, or deluded by some form of cryptesthesia[2]. From making money to losing money, to making money to losing money, the ever present treadmill continues; its cycle making mere mortals into kings and usurping the incumbent monarchies from their precarious thrones.

Through this crisis of consciousness I was able to access a far deeper, more collective wisdom, to provide an analytical psychology approach to the mechanics of the markets and her participants that I believe provides us with a far better understanding.

Warning: the theories we are about to explore will not provide you with an ability to forecast the direction of the market. That in my opinion is not something that can be done with any great degree of confidence, rather my goal is to try and explain whether the market is behaving in a fashion symptomatic of a psychological neurosis or psychosis adopting a psychoanalytical approach as my tool of analysis. In plain English we are proverbially going to place the market on the couch and analyse whether there are raw complexes, awaiting autonomous eruption or some emotional blockages causing disequilibrium in some of the actors comprising the markets.

The goal and thesis of this book is to provide the reader with tools to recognize the conscious and unconscious behaviour of the market place and her participants, and the ability to tune into the energy levels governing this behaviour so that investors can take protective action, where you can observe displaced equilibrium.  To do this I am going to introduce you to Carl Gustav Jung’s writings on the COMPLEX and we will look at ways to analyse the different complexes and measure where possible the amplification of the libido within these psychic vessels operating the markets. To achieve this goal we will need to learn about the strata of the psyche Jung uses; as without a basic understanding of his model the ideas contained in this book will have limited if any value. We will explore from a psychological point of view the role government and central banks play as well as the trader and investor community as actors in the market process. We will learn more about the ARCHETYPES first from a theoretical point of view and then see how complexes constellate providing valuable clues to motivating behaviour. I am not sure I will succeed but my hope is that by the end of this book we will have developed a toolkit that will not necessarily predict future movement, as the future is not knowable, but what it will provide is a clue as to whether we can expect irrational behaviour. You are probably wondering as a trader or investor how this will help you, I will demonstrate towards the end of the book how using long term strategies and being able to identify market regimes or environments which are prone to irrational extreme behaviour can be a very valuable weapon to have in your investing arsenal. Writes Jung:

The complex has a sort of body, a certain amount of it own physiology. It can upset the stomach. It upsets the breathing, it disturbs the heart – in short, it behaves like a partial personality. For instance, when you want to say or do something and unfortunately a complex interferes with this intention, then you say or do something different from what you intended. You are simply interrupted, and your best intention gets upset by the complex, exactly as if you had been interfered with by a human being or by circumstances from outside[3].

My favourite writing style is taking complex (there is that word again) ideas and presenting them in an engaging easy to understand way, with a sprinkling of self-deprecating humour. However, this book is essentially a stock market application to Jungian psychology and Jung uses a lexicon of words that are unfamiliar to the reader not versed in his psychology. With this in mind and the fact that my hope is for this book to appeal to both academic and casual readers I will use a somewhat formal style thus using some big words in presenting my ideas. This is important; yes there is some desire for me to sound more intelligent than I am with the use of exotic often Latin and Greek words, but far more important is the fact that these words carry generations of meaning which explain somewhat esoteric concepts in a more consistent manner. You will also notice that I have placed every Jungian term or concept in italics to act as a prompt to show you that these are Jung terms representing his depth of understanding the human mind. You will no doubt recognize many words; words that you probably never knew were part of his Collective Works[4].


We should know what our convictions are, and stand for them. Upon one’s own philosophy, conscious or unconscious, depends one’s ultimate interpretation of the facts. Therefore it is wise to be as clear as possible about one’s subjective principles. As the man is, so will be his ultimate truth ~ Jung.

As Jung says every analyst brings some subjective bias to their interpretation of an analysis. Yours truly is no different, so let us go back in time and learn a little bit of history. I am not sure if you have noticed that the etymology of the word history, is “his” “story” so let me tell you my story.

I was born in 1971 at the coastal city of Port Elizabeth – South Africa, second child to loving and devoted parents. I enjoyed a very “normal” privileged upbringing with a father who was a successful businessman and a stay at home mother who was always around to look after the family’s needs. We were well-off, but not stinking rich, my father was not one for extravagant holidays and needless luxuries around the house; however he did break down and buy himself a Porsche 944 turbo around my 15th birthday and his golf alter-ego (persona) did see his dress code take on ever flashier dimensions culminating at its extreme with a pink Stetson with a floral golf shirt and yellow paints. However, don’t be fooled by this image, my father was a perfectionist and a tough task master who didn’t suffer fools lightly and he never tolerated, and I mean never tolerated, disobedience or bad behaviour. That applied to staff and yours truly – ouch!

As tough as my father was so was my mother gentle and understanding. Those who know my mom know what a character she is, she is a kind-hearted caring eccentric, who like me spends her life engaging and dodging social interaction. We are both introverts covered in extroverted wrapping (for those of you who don’t know these are Jungian terms describing personality types).

My sister is 14 months older than me and is someone I greatly admire and respect, we grew up close and remain even closer today. Because we are dealing with depth-psychology, background and upbringing are formative stages in the psyche’s development and it wouldn’t be fair for you the reader to read my perspective of the world without getting a glimpse into what path has brought me to this point in my life and influenced my perspective. I am not going into all the details as I am not famous and my background is probably boring you to tears, and just by the way it has no relevance to the thesis of this book, but certainly influences how I put my points across.

My schooling from an academic point of view can be described as non-existent. I was lazy, naughty and totally disinterested and my average results can attest to this fact, but this was to change at university as I became more interested in the subjects I was studying and realized the importance of a degree to get a good job; so I applied myself. In short I got good grades, over the next 17yrs I got a Bachelor of Commerce degree in economics which I followed with a Master of Science in property economics and some 10yrs later I completed (2007) a Ph.D. in economics with a focus on behavioural finance.

At the end of high school my family and I relocated from Port Elizabeth to Johannesburg. At the age of 19 after a year of sowing my wild-oats I became a religiously observant Jew whatever that means. I dislike the term religious as it implies an element of self-righteousness which I hope to G-d I don’t project. I think of myself as just like everyone else trying to do my best, with some success and plenty of failure along the way, pretty much like my trading account. This commitment to lead my life in a more meaningful spiritual way has had a large impact on my life. I don’t believe in coincidence, I believe every interaction, every thought and every circumstance has a purpose and it is up to each one of us to discover its meaning. Ok this may make me seem like this super intense dude that is so serious that it’s difficult to have a laugh with. Nothing could be further from the truth, I am a complete goofball not afraid to expose my immature self, picture this 105kg unit of quivering passion behaving like um… a monkey or as my wife would say a gorilla. However, I pray 3 times a day and set aside some time each day to learn something new from the Talmud and my vast secular textbook collection; “Hi I am Michael Berman, I am a bookworm and proud of it.”

At university I met the women of my dreams, she was 20 and I was 21 we got married 4 yrs later in 1996. Meeting and marrying my soul mate has been one of my greatest blessings to which no words can describe my gratitude and love to be able to share my journey with my “other half”; together we have been blessed with two wonderful children, a girl and a boy 3 yrs her junior each very different and unique in their own way.

The first 10 yrs of my work career were extremely gratifying as I climbed the corporate ladder and enjoyed financial success and recognition as a hedge fund manager. The second 10 yrs have been far more volatile and dramatic, and it is often these challenging periods that provide us with the greatest opportunities for growth.

As Carol S. Pearson says, “Each time we become aware that we are suffering, it is a signal that we are ready to move on and make changes to our lives. Our task, then is to explore the suffering, to be aware of it, to claim fully that we indeed are hurting. In this way, suffering can be a gift. Suffering also reminds us of our common mortality, that none of us is exempt from the difficulties of human existence.”

I write these words as much for the reader as for myself, as it is easy to feel overcome with worry and despair with no apparent solution to our predicaments. However, deep within our psyche resides ancient, evolutionary, well adapted instinctual reservoirs filled with answers; Jung called them Archetypes and they are there waiting for us to integrate into our conscious minds, to release the displaced energy flow and achieve a more natural equilibrium state of mind. Don’t for one minute think what I am saying is easy and that I am preaching a happy-ever-after solution awaits. We will discover during the course of this book that our ego will sometimes play tricks on us and feed what we believe to be a solution with negative consequences, usually in the form of shadow projections. This however, is part of the process of self-discovery and meeting shadow aspects of our psyche is part of the Jungian individuation process.

At the end of 2007 we emigrated from South Africa to Australia to join some and lead other family members to our adopted homeland “Down Under.” We can now report that more than 50 members of our immediate family have happily (this is a relative concept) integrated into the Australian way of life.

If you are going to read a book about the markets you should want to know if the author knows what he or she is talking about. I have been a professional money manager since 2002, but my investment career started way back in 1984 at age 13 with proceeds from my bar mitzvah[5]. In my early days I traded tips, and 1 dimensional market news. My mother would feed me a steady flow of tips from her bridge friends, with my first big winner being a manganese mine called Samancor; I would love going with my mom to our brokers office downtown to sign transfer certificates and feel the atmosphere of the market place in their luxury offices. It always made me feel like a big shot wheeling and dealing in these conglomerates.

After a successful career as a property developer and asset manager I decided that trading the markets was what I wanted to do. Having managed a hedge fund and proprietary accounts for more than 12 years in 2012 I launched a company called RAPA (Risk and Profit Analyzer) an emerging manager incubation platform, and in the last quarter of 2014 we merged with an American emerging manager platform FundSeeder ( I have run funds as a top down global macro manager, as a long / short equities manager, I have established and run 2 pure quant funds, I have traded funds using technical, economic, fundamental, behavioural and statistical arbitrage. Over more than 12 years of professionally trading the markets and watching and following the markets daily I now feel like I have enough experience and insight to put forward an innovative approach to interpreting how the markets work.


In order for me to write a psychotherapeutic approach to the markets, it is important to put forward some credentials, as I am not a clinical psychologist. I will therefore describe my psychology experience and you can draw your own conclusions as to whether I am sufficiently qualified to write about this subject.

After finishing high school I started journaling about my inner thoughts something I continue to do to this day i.e. more than 25yrs ago; my first journal I titled, “Thoughts in a Make-Shift Mortuary.” Needless to say my writings from that initial period of 18 years old were pretty dark and morbid. Hmmm, I wonder if anything has changed……

At age 20 I had my first psychotherapy experience. I had just broken up with my first serious girlfriend and was feeling pretty depressed about life; I was studying psychology at university at the time so thought seeing a shrink would be a good thing to do. The psychotherapist I went to was of the Freudian persuasion and wanted to go really deep and do a full scale regression of my childhood, and I thought I was there to talk about chicks. On about the 3rd session when he proposed the regression he scared the crap out of me when he said “are you ready for me to go deep into your early childhood and open up a potential can of worms?” You damn right I wasn’t ready for that and that is the last time I ever saw him, although he said one thing that has always stuck with me. He said, “Travel light, stay away from people with baggage, you have a long road ahead and you cannot afford to schlepp any extra weight”. Pretty wise words!

At the age of 27 I was to experience a shocking tragedy, my father aged 57 committed suicide, having succumbed to a business triggered depression. A short 6 weeks before his death he was at the top of his game, about to sell his business to a large multinational company for a handsome profit. After a year of negotiation and due diligence all was set, then for matters unrelated to his deal it never went through; this was to shatter my father’s dreams and lead to his mental breakdown. Following his passing I went for two grief counselling sessions with a psychologist, and then felt equipped with the support of my family and friends and strong community to soldier on with my life. A quick digression, Judaism has a very strict and organized system of dealing with grief which lasts for a full year. You cannot attend any large social gatherings or festivities; you cannot go to the movies or do anything considered joyous as per our traditions teachings. This isn’t meant to be a punishment on the contrary it is an ingenious way to force you to confront your grief and perform an intense introspection and soul searching.

My next encounter with a shrink came in 2002 at age 31, which unlike my previous two encounters was to last more than five years. It has quite a funny beginning, I was a hedge fund manager and read about Dr Van Tharp a trading psychologist in one of Jack Schwagers[6] books, Market Wizards. I was determined to find a “trading psychologist” in Johannesburg so I called up the South African Society of Psychology and had a discussion with a very helpful official. She suggested I call a guy in my local area which I did; when I described to him what I was looking for he said he was definitely the wrong guy, but I should call this guy Dr Barry[7]as he was a peak performance coach. What I didn’t know was Dr Barry was the country’s leading sexologist, and his definition of peak performance was a far cry to the selling climax I had in mind as hedge fund manager.

Dr Barry helped me access my unconscious from a general depth-psychology point of view, sprinkled with a healthy dose of cognitive behavioural therapy (CBT) and lots of neuro linguistic programming (NLP); his greatest gift was teaching me meditation and self-hypnosis. I take this stuff seriously as I did then and I immediately had a dark room kitted out in our office, complete with bed and sound system to create a space that would encourage meditations. I am still a fan but meditate a lot less than I should.

In 2009 (Sydney) I spent about a year working with a Chinese psychologist; the reason why I mention my psychologists racial profile is because I was intrigued by her natural use of eastern esoteric modalities, despite her formal western psychology training. We did a lot of meditation with crystals on strategically placed neural pathways; one thing I can say with certainty is that if a person not open to the metaphysical side of the world were to have walked in on our sessions they would have thought us certifiably mad.

For me 2009 proved to be pivotal in that it was the year I discovered the writings of Carl Gustav Jung. One of the first books I read on my BeBook e-Reader was the auto-biographical, Memories Dreams and Reflections the fact that Jung could recall such vivid memories from his early childhood resonated with me as I have equally strong recollections, some going back as far as 2yrs old. From that point onwards I have become progressively more of a Jungian scholar but it would be arrogant and incorrect for me to say that I am a Jungian expert or analyst. I have read in the original the majority of his massive, Collected Works[8], and you will see in the bibliography the full extent of my Jungian research.

A fact you may not be aware of is that registered psychologists have to spend a number of years in therapy before gaining registration, and then continue therapy on a regular basis. I know what you are thinking, that it is because most shrinks are fruit-loops. This year (2014) I upped my game and decided to move beyond the theory and experience a true Jungian analysis. Finding a Jungian analyst is not a simple task as there are only about 1,500 certified Jungian analysts in the world, it takes upwards of 7yrs of postgraduate work to become a certified Jungian analyst. I started work with a women with whom I just didn’t connect strongly enough with and I am now working with a Jungian analyst more suited to my personality, and my understanding of the material I am writing about in this book is growing tremendously. We are all a work in progress and hope I am able to take you on a deep hero’s journey into the mercurial underworld I call the market complex.

[1] Nature inherently tends towards definite ends

[2] Allegedly paranormal perception or clairvoyance.

[3] Jung 1936/1976, para. 149

[4] The Collective Works published in English by …… comprises 20 volumes writing over more than 50yrs.

[5] A rite of passage where a Jewish boy at age 13 becomes a “man” according to Jewish law.

[6] Who would have thought I would subsequently enter into a business venture FundSeeder with Jack.

[7] Made up name.

[8] The Collected Works, the Bollingen Series published in English comprises 20 volumes writing by Jung over more than 50yrs.

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