Do you believe in ghosts? It doesn’t matter. The best films on the subject will have you incontrovertibly convinced until the theater lights come on. There have been good and bad films claiming to be “horror,” on slashers, poltergeists, cannibals, plagues, zombies, vampires and even vaginal teeth. None quite spook the soul like an old-fashioned ghost yarn. Ghosts are often felt and not seen, the icy spot in the empty room or the creak of tree branches overhead in a dark wood. Ghosts are: the door that shuts on its own, the piano that plays in the dark, the distant train miles from any tracks. I don’t know about you, but I’ll take a hockey-mask wearing killer.

Paranormal Activity understands this. It understands that the bump in the night is scarier than whatever caused it, because nothing trumps the beast inside us that we can cook up in the stew of our A.M. nightmares. Its not-too-distant cousin is 1999’s Blair Witch Project. Both exploit the unknown, the folk-tale, the dread of the imaging mind. Both utilize found footage, and “natural” acting of young people using their real names and four-letter words in casual conversation.

Director Oren Peli took $11,000 and didn’t buy a used Honda Civic. He filmed a haunted-house tale in his two-story San Diego apartment, cast unknown actors Katie Featherston and Micah Sloat and some low-budget special effects (talcum powder, an Ouija board, some shadows and wire stuff) and created a powerful work of spellbinding creepiness.

Katie has felt a presence following her for the duration of her life. When she was a little girl, a dark shape would materialize at the foot of her bed, leaving her paralyzed with fear. Her childhood home mysteriously burned down. Now she’s an English graduate student, living with her day-trader boyfriend Micah. He’s a self-proclaimed badass / fledging paranormal documentarian. He’s spent a pretty penny on a brand new monster camera with night-vision and digital playback. Katie’s feelings? Who cares? New toy!

There is a contrast between the Real World melodrama of the couple’s daily lives and their nighttime haunts. They argue, joke, call in a psychic and realize they’re in for more than they bargained for. “What does it want? Let’s give it what it wants,” says Micah. “I think what it wants is Katie,” replies the psychic dryly. The audience giggles.

The giggling stops when darkness falls. An establishing shot of the camera, night-vision on, sitting on a tripod in the corner of the couple’s room as they sleep, the text “Night #1” fading on and off the screen like a documentary, the timer in the right-hand corner fast forwarding into the wee morning hours and then slowing down. Nothing happens, except for a sub-bass note, a low menacing drone.

The next morning, the two review their footage, and nothing happens. The car keys fell off the counter. Micah scoffs. The audience scoffs.

The next time that night shot of the couple’s room arrives, everyone in the audience is apprehensive. It’s a dread-building technique. It’s a wide-angle shot of the bedroom, the bed on the right, the dark hallway on the left. The audience’s eyes dart between the door and the couple sleeping. The hairs on the back of the neck go up. The timer slows down. And something happens.

As the film proceeds, and the shenanigans up their ante, the audience grows uncomfortably silent. This is effective atmosphere and horror. What happens? Don’t watch the trailer. Go see the film with friends. Buy into it. You’ll feel your pulse throb when “Night #13” rolls around.

After it was over, he audience I saw it with sat in silence until the lights came on. No one spoke as we exited the theater. People had been screaming fifteen minutes earlier. A new masterpiece of horror has arrived, and even Steven Spielberg was scared. Like the best ghost stories — not The Haunting or a dozen J-horror remakes — but like the scary stories your aunt or older siblings irresponsibly told you on stormy nights with cackling glee: what you imagine is what you don’t see.

If you don’t find Paranormal scary, you’ve seen too many Saw sequels.