"There are still alot of us out there but our minority is so small now, I believe all we can do is stand and watch, very sad!"
Yes, Ren...you're all over it. There are just so many things that can still be said about what we are about to see. Ultimately, people will have to go to PM or cash until this shakes out and it may take a while because there is a lot more BS out there than there is actual cash. This is going to be ugly but we've been saying that for a few years now.
<< <i>"There are still alot of us out there but our minority is so small now, I believe all we can do is stand and watch, very sad!"
Yes, Ren...you're all over it. There are just so many things that can still be said about what we are about to see. Ultimately, people will have to go to PM or cash until this shakes out and it may take a while because there is a lot more BS out there than there is actual cash. This is going to be ugly but we've been saying that for a few years now. >>
Another alarming point this afternoon was that I had to explain to the aforementioned pilot his question of "why gold?" He didn't get it because it goes up and down and what is it's wealth in this time of crisis. I explained to him that when Mr. Potter (It's a Wonderful Life) says I will give you 50c on the $1 when your bank is closed at least you have some gold to convert at some time when there is a new currency. I think the conversion may be more like $25US to $1GD (global dollar). And if you had gold it will hold up value, most likely. I gave him the examples of how oil is priced in dollars and now other currencies. I told him to look at the price of gold in other currencies. It's sad really, he is at least thinking about doing something where most are still wondering what Stars are still dancing. He then asked me if I was storing food....I said yes. He laughed. I told him it's not a cultural thing. I used to live at 10,250 in the Rockies and got snowed in for 6 days in a tiny town. All roads were blocked. My wife and I lived off of rice and other stuffs. I've been in other countries, recently Ethiopia, where food was scarce, shelves were empty. It can happen here.
After the dust settles, all the trillions in losses are paid, the investment companies and hedge funds spend all their cash, and sell their assets, who is going to be left to invest in the American markets to affect a recovery?
Lehman to Spark Record Payout for Credit Swap Sellers (Update1) By Shannon D. Harrington and Neil Unmack
Oct. 10 (Bloomberg) -- The collapse of Lehman Brothers Holdings Inc. may force Pacific Investment Management Co. and other sellers of credit-default swaps to make the biggest-ever payout in the $55 trillion market. An auction to be held today will determine the size of the payments buyers of default protection can claim after New York- based Lehman filed for the largest bankruptcy with $618 billion in debt. Lehman's $128 billion of bonds were trading yesterday at an average of 13 cents on the dollar, indicating credit swap sellers may have to pay 87 cents.
The list of participants includes Newport Beach, California- based Pimco, manager of the world's largest bond fund, Chicago- based hedge fund manager Citadel Investment Group LLC, and American International Group Inc., the New York-based insurer taken over by the government, according to the International Swaps and Derivatives Association in New York.
Hedge funds, insurance companies and banks typically buy and sell credit protection, which is used either to insure a bond against default or as a bet against the company's ability to pay its debt. More than 350 banks and investors signed up to settle credit-default swaps tied to Lehman.
Banks can go to the Federal Reserve, or use the commercial paper market where it is still functioning'' to meet protection payments, said Cicione. ``But fund managers or hedge funds, once they've used their cash, have only one option, to sell assets.''
A unit of Primus Guaranty Ltd., a Bermuda-based company that has sold more than $24 billion in credit-default swaps, said last month it guaranteed $80 million of Lehman debt. The firm sold protection on $215 million of Fannie and Freddie debt and $16.1 million on WaMu. Yesterday, it said it also had made bets of $68.2 million on Kaupthing Bank hf, which the Icelandic government seized.
Primus said last week it had $820 million in cash and liquid investments to meet claims on the contracts.
This is a global problem. So your question should be, "Who is going to invest in the world?" And before someone answers with "India and China are growing 15% per year", you better do some homework.
We need to let the financial system collapse with no bailouts and rebuild again. Let the American people take everything out of the stock market and save what they can. The trillions from the Fed should be reinvested in U.S. infrastructure (Rebuild factories, so we can become less dependent on imports) and new sources of energy(less dependent on foreign oil). Invest in infrastructure and true solid American companies like Proctor and Gamble and other companines that provide staples for the American people, not financial vehicles that prove worthless. America has lost its common sense.
Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'... MORE
<< <i>We need to let the financial system collapse with no bailouts and rebuild again. Let the American people take everything out of the stock market and save what they can. The trillions from the Fed should be reinvested in U.S. infrastructure (Rebuild factories, so we can become less dependent on imports) and new sources of energy(less dependent on foreign oil). Invest in infrastructure and true solid American companies like Proctor and Gamble and other companines that provide staples for the American people, not financial vehicles that prove worthless. America has lost its common sense. >>
pf70 I think you are right. I'm sure it's the only way to kill off the socialist stranglehold that is currently on America. There may be other methods, but there's nothing like a full collapse to get "their" attention. Unfortunately, the sheeple will flock to the first eloquent leader to show the new way instead of rediscovering the Constitution.
Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'... MORE >>
Well is this the 1987 or 1929 pattern of the stock market? IMO it's going to be closer to 1929 than 1987 which came back within a year. I've heard last night (talking head on TV) that from the crash of 1929 it took until 1954 before the market came back from it's peak although I haven't researched this. That's not saying any new money didn't make $$$ in those decades just money that was already in the market. Boy if that's the case I don't think many of us could wait that long to get their money back, glad I've been in T-Bills since mid last year although they weren't paying much interest and everyone was calling me crazy. I did dip in and out for some profit on oils 3 or 4 times with maybe 20% of my money. I hope the best for everyone of us Americans and pray to god this is another 1987.
The point to my question earlier in the week was directed to this subject.
Who will be left to play in this market to drive the prices back up?
So much of this market has been driven by speculation that much of that speculation is now the very force to drive the market downward.
Look at this example:
Chesapeake Energy Corp. (CHK:US): The petroleum producer said Chief Executive Officer Aubrey McClendon involuntarily sold ``substantially'' all of his shares in the company over the past three days to meet margin loan calls. The stock fell 6.7 percent to $16.52 in regular trading. CHK: was trading at $68 just a few months ago.
Not only has our stock market turned into the biggest gambling hall in the world, but also much of this has been done with credit!
Once all this is over who will be left to re-inflate the bubble?
The Boomers are about done, they no longer have a “long term” horizon, and it has taken 7 years to recover this market from the 2001 crash.
No doubt many of the thousands of hedge funds will go out of business.
The investment banks are all gone.
More Federal taxes will have to be added next year, no matter who is in charge, to pay for the on going mess, and younger working peoples budgets are already strained.
Credit cards, bank lines, and home ATM’S are shrinking or gone.
Millions of the folks are just throwing the javelin in the pond and refusing to play anymore.
I think to Dave’s point, those that do venture back into the market will be looking for stocks that pay high dividends, and have very low book to price values.
.... that from the crash of 1929 it took until 1954 before the market came back from it's peak although I haven't researched this. That's not saying any new money didn't make $$$ in those decades just money that was already in the market. Boy if that's the case I don't think many of us could wait that long to get their money back...
The time frame is true but most people aren't aware of it. Most think the market recovered and soared in the 1940's. All they know is that the recent super-bull that began in 1981-1982 that never had a complete washout. With about 20-26 years depending on how you count the peak, that old bull was long in the tooth. And the flip side is that it's a long time before another peak occurs. The stock market did cycle up and down a couple of time in the 1930's such that traders could make money if properly positioned.
Stocks were in a bull market until around 1966 and then cycled basically nowhere (as inflation destroyed real returns) until 1982...16 years down. Traders made money, the buy and hold types did not.
The overhang of $1.125 QUADRILLION in derivatives ensures that this is not going to be 1987.
<< <i>.... that from the crash of 1929 it took until 1954 before the market came back from it's peak although I haven't researched this. That's not saying any new money didn't make $$$ in those decades just money that was already in the market. Boy if that's the case I don't think many of us could wait that long to get their money back...
The time frame is true but most people aren't aware of it. Most think the market recovered and soared in the 1940's. All they know is that the recent super-bull that began in 1981-1982 that never had a complete washout. With about 20-26 years depending on how you count the peak, that old bull was long in the tooth. And the flip side is that it's a long time before another peak occurs. The stock market did cycle up and down a couple of time in the 1930's such that traders could make money if properly positioned.
Stocks were in a bull market until around 1966 and then cycled basically nowhere (as inflation destroyed real returns) until 1982...16 years down. Traders made money, the buy and hold types did not.
The overhang of $1.125 QUADRILLION in derivatives ensures that this is not going to be 1987.
roadrunner >>
The mother of all trading opportunities occur during bear markets. You had at least 2 years of 100% returns in the early part of the last century. A 5 fold rally from 1932-1936. And several 30-60% trades in the 70's. Just as there was a 100+% return from 2003-2007. I think there will be some MONSTER trades in this market over the next 5-10 years, but you must keep your powder dry.
Note that the 1.5% and 3.7% drops in the DOW during the last 2 bear markets are not inflation adjusted. They would look far different otherwise.
Log charts with annualized rates are cool because they don't show how severe the most recent falls are. On this chart the recent drop from 14,000 to 8,500 looks like a walk in the park. Good thing they started with DOW at 10,000 in Jan 2000 rather than DOW at 14000 in 2007 or the annualized rates would be in the -30% to -40% range.
<< <i>Note that the 1.5% and 3.7% drops in the DOW during the last 2 bear markets are not inflation adjusted. They would look far different otherwise.
Log charts with annualized rates are cool because they don't show how severe the most recent falls are. On this chart the recent drop from 14,000 to 8,500 looks like a walk in the park. Good thing they started with DOW at 10,000 in Jan 2000 rather than DOW at 14000 in 2007 or the annualized rates would be in the -30% to -40% range.
roadrunner >>
Not sure they need to be inflation adjusted? Since the % drop is based on what the current dow level is when the drop occurs?
All investments should be inflation adjusted to show how they performed in real terms. Even a nominal 3% inflation per year from 1996 to 2007 should be subtracted from the equation (over 30%). This would make the Dow gain from 10,000 to 14,000 more accurately reflect a false "gain" due to a loss in value of the dollar.
Another way to inflation adjust the Dow's paper gains up to 2007 is to ratio it against the USDX, gold, or CRB index.
Hummmmmmmmm...so we're looking at coming to 10K posts on this thread, if we don't get nuked during the elections. Hopefully we can have some kind of celebration and I was thinkin'; maybe we could have a post your metal day and we can just post metal all day starting with the 10,000th post? Just a thought but you've heard the term all hat and no cattle well, here's a time to post your metal. Be it a little or be it a lot, show us a picture of what you've got. Of course guns, ammo, other antipersonnel weapons are metal and somewhat involved in the situation anyway but how about just bullion, ingots, nuggets, shot, medals, coins, buttons, jewelry stock, gold certificates, cool stuff from the "hey, look at this one" category what ever you've got, hey, even granny's gold tooth. My personal contribution will be an indian attack. Seemed like we ought to do something to recognize the occasion.
I have agreed with most of you on this thread for many years now, I have been a good gold bull and have been hoarding since 2003 . PMs are a greater % of my net worth than they are meant to be (according to the pundits), I am essentially debt free and my only exposure to the stock market is in my defined benefit plan which I can only use in another 20 years.
Having said this I think it is time for a change of plan .
I spent most of my life in a country where the inflation rate was 15% ++ and I think that the same will apply here for the next few years/decades.
The success stories in an environment like this depend on leveraging into hard assets.
None of us can predict the bottom , in the stock market , property market, interest rate market,or any other market for that matter , but I think that we can all agree that we are closer to the bottom than we are to the top .
Now is the time to start diversifying into these markets, one can borrow money now at 7.5% and earn dividends of 12+ %, we can buy property at 6% knowing with certainty that the value of the dollar is going to deteriorate and that our payments will seem trivial in 10 years time.
Just my humble opinion ...personally I am starting to nibble at stocks (commodity stocks mainly) and trying to get a loan for property that I plan to rent out. I will hold onto some of my PM holdings just because they guaranteed a good nights sleep these last few weeks when the worlds wealth was cut by so many trillions.
“All investments should be inflation adjusted to show how they performed in real terms. Even a nominal 3% inflation per year from 1996 to 2007 should be subtracted from the equation (over 30%). This would make the Dow gain from 10,000 to 14,000 more accurately reflect a false "gain" due to a loss in value of the dollar.
Another way to inflation adjust the Dow's paper gains up to 2007 is to ratio it against the USDX, gold, or CRB index.”
In addition lets not forget how the DOW boys fix the game of averages by deleting weak companies and replacing them with strong ones !!!! How many DOW companies have already been replaced this year, and how many are on the verge?
In this battle to pick investments, the public battling the traders and the pros, is a game similar to bringing a 3-inch knife to a gunfight.
Just an observation, but we may see markets going forward for a few weeks or months that act much like the market did on Friday moving 1,000 points in all directions.
This reminds me of that kids game “whack the mole” where you try to beat your opponent buy whacking the plastic mole that pops up the fastest. This is a little different in that it is click the mouse. I noticed last week that some brokers might be better than others in this game. Scottrade generally has a 4 second time to complete a transaction, but last week one of my trades took a whole minute. There is no way I can compete so I am out, Ha Ha
“Hopefully we can have some kind of celebration and I was thinking'; maybe we could have a post your metal day and we can just post metal all day starting with the 10,000th post? Just a thought but you've heard the term all hat and no cattle well, here's a time to post your metal.”
Good suggestion MH
You don’t really think that all the folks that read this each day think we are not smart enough to take our own advice?
“Now is the time to start diversifying into these markets, one can borrow money now at 7.5% and earn dividends of 12+ %, we can buy property at 6% knowing with certainty that the value of the dollar is going to deteriorate and that our payments will seem trivial in 10 years time.”
JF
I agree somewhat with this but I think that first and foremost an investor must do their own research, and take no advice form brokers.
Second one must be very careful with margin, look at the case in point on Chesapeake Energy Corp. (CHK:US): above.
In addition look to what has happened to some of Peter Schiff’s investments in the Canadian oil trusts, Harvest Energy Trust HTE:NYSE is down from $30 to $8 and is now paying a 41.63% dividend.
Same situation with Pengrowth Energy Trust PGH:NYSE, or Excel Maritime Carriers Ltd EXM:NYSE.
These great companies are all in the toilet because the Hedge funds, etc. had margin calls and were forced to dump them, and who knows what is left to dump? Every move down causes more forced selling.
I bought some HTE at $14 and it was paying a dividend of 16%. I considered loading up my margin account with the stuff as my margin rate was 8%. How could you lose??
I did not do that and a good thing as the stock is now nearly in half!!
One thing that we do need to start thinking about is where do we go from here?
We have all been pretty correct in our over all thinking the last four years, and the crash is happening before our eyes.
We started this thread just to keep each other informed, but now I think we now have a duty to give at least suggestions to those hundreds, or perhaps thousands of folks that now read this thread.
I do not think we can predict that this calamity will be like anything we have ever seen in our 232-year history. Our current economy is far different that any we have had in the past.
First of all, we are more of a Socialist country that at any time in our history.
Second, huge amounts of the population, business as well as individuals, are already reliant on the Federal government this will only get worse in the coming 15 months.
Third, The amount of money been created during this crises will equal enough new debt to fill up 5 years of indebtedness in the most recent past.
Forth, huge consolidations will continue in the business world, car companies will be Nationalized, or merged, with government guarantees etc.
What this is looking like is a deep recession followed by a sever inflation period. If that is indeed the case there is still time for the folks to get their act together.
I know that when we started this thread, and began telling the public that the government debt, the derivative markets, the pork in Washington was not sustainable, most folks just laughed, and went on their merry way.
I think those of us preaching common sense investing, and tempered use of credit now have their attention.
I'm going to start to buy BP with an 8% div. My thoughts are buy things you need: Food companies, oil/gas, utilities. They may not be the ones that hit the home runs but they'll do just fine and if this really turns bad they'll do better than most of the market since you need to eat, drive, and heat/cool your house. I think this week I'm going to start to average out of cash at about a 100 shares a clip and average.
I'd sure like to see break downs of the DOW since they drop and add stocks all the time, it's a distorted chart when you not tracking the same companies like you do with gold. If we could have sub'd Rhodium for gold the PM's would have looked like world beaters. I have a document linked somewhere that gives every change in the DOW since 1900, I may have to find it and post it for those interested.
I'd like to share a site address for Hoisington Managment Group, Headed by Lacy H. Hunt PHD.
These gentlemen provide a very definitive quarterly review and future out look for the U.S. and world economies.
They do not speak directly toward pm's, but mention them now and again.
They do provide an in depth studious and qualitative analysis of a myriad of economic data and concisely present it in laymens terms complete with graphs and charts and long term data.
I have followed them for years and have found them very accurate in their outlooks.
Its worth a look, its free, Just go to WWW.HOISINGTONMGT.COM and click on Economic Overview. You can click on back issues and check their accuracy.www.hoisingtonmgt.com
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
The Dow 30 rotated out of oil and into Tech to be fashionable - right as oil bottomed and tech topped. Would be interesting to see how high the peak would have been, absent the "improvements".
I'd like to share a the site address for Hoisington Managment Group, Head by Lacy H. Hunt PHD.
These gentlemen provide a very definitive quarterly review and future out look for the U.S. and world economies.
They do not speak directly toward pm's, but mention them now and again.
They do provide an in depth studious and qualitative analysis of a myriad of economic data and concisely present it in laymens terms complete with graphs and charts and long term data.
I have followed them for years and have found them very accurate in their outlooks.
Its worth a look, its free, Just go to WWW.HOISINGTONMGT.COM and click on Economic Overview. You can click on back issues and check their accuracy. www.hoisingtonmgt.com
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
As far as the time to get into the stock market in general, I'd prefer to wait until the Dow/gold ratio and the USDollar index bottom. That's a couple of years away still imo. With the majority of the mortgage and credit derivatives still left to unwind, there are many TRILLIONs in losses still to pile up. And after tacking on another $5-$20 TRILLIONs in MBS and CDS losses, the next hurdle will be dealing with hundreds of TRILLIONS in interest rate swaps. It's still about keeping what you have rather than trying to outguess a completely irrational market and suffer further losses trying to be cute. If it's not in your hand, you may not really own it.
I do like selected resource stocks as a rule. They will prosper in the next market rebound. Some of the gold miners are at absolutely stupidly low levels for companies that are making excellent profits. In this environment, gold and precious metals still have a vital safety role to play. The collector in me has always liked generic slabbed gold, esp $20 Saints and Libs. The premiums right now are too high for my taste so I'm currently watching.
Waiting for the bottom is as dangerous as shorting at these levels , Nobody rings a bell at the top or bottom of any market to let us regular folks know that things are about to change. Things have already changed in many ways and an investor should at least have a plan for the future and start moving in that direction . Resource stocks and utiilities and commodities have all been thrashed with the rest of the market . A lot of these are paying double digit dividends and the underlying source of these profits is still intact to a large degree. One could lock in the high yield as well as take advantage of the future bounce in these stocks even if they bounce back to 50% of their highs of a few months ago . At some stage in the near future the shorts will turn bullish and this thing is going to fly.
NumbersUsacom, Thanks for your post, Here is part of their statement in the “overlook for the 2nd quarter of 2008”
This will be the question to challenge the minds here, inflation or deflation, or perhaps both?
HoisingtonMgt.com Quarterly Review and Outlook Second Quarter 2008
“The fixed income investment conclusion is that inflation is endemic, and since the market does not currently reflect such dire inflation prospects, long dated Treasury securities should be sold. We would be among the first to move to the short dated part of the curve if the economic statistics supported the above view. Our conclusion is that deflation, not inflation, is, and will continue to be, the essential problem for the U.S.”
Inflation or Deflation, who knows houses and oil are going one way while food and medical are going another. We're getting to the point that deflation can't be controled by reducing interest rates. These are interesting times. Here's a very good piece to read on these issues and the expects have a hard time explaining the theories also:
Influencing interest rates is a commonly used method of reducing inflation or avoiding deflation. Gongloff at CNN Money sites a Federal Reserve study that says "Japan's deflation could have been dodged, for example, if the Bank of Japan (BOJ) had only cut interest rates by 2 more percentage points between 1991 and 1995." Colin Asher points out that sometimes that if interest rates are too low, this method of controlling deflation is no longer an option, as currently in Japan where interest rates are practically zero. Changing interest rates in some circumstances is an effective way of controling deflation through controlling the money supply. We finally get to the original question: "Is the problem that there is more to printing money than printing money? Is in fact the way printed money gets into circulation, that the fed buys bonds, and thus gets money into the economy?". That's precisely what happens. The money the Fed gets to buy government securities has to come from somewhere. Generally it is just created in order for the Fed to carry out its open market operations. So in most instances, when economists talk about "printing more money" and "the Fed lowering interest rates" they're talking about the same thing. If interest rates are already zero, as in Japan, there is little room to lower them further, so using this policy to fight deflation will not work well. Fortunately interest rates in the U.S. have not yet reached the lows of those in Japan.
Gold is apparently looking to retest $792 to $850 one last time per David Nichols. As of Friday we had one heck of a PPT pushdown along with their plugging of stocks late in the day. This last drop to $850 could have been the final retest.
After gold's retest then it's time to head for a new high. We may already have done that but I think a retest down further to $800 is still quite possible. The fractal dimension that gold has currently built up is quite high. Silver is not far behind. If you've been following this analysis over the last 12 months you'd know that Nichols has been dead on with his gold calls, both up and down. He called all 3 of the major corrections this year. Until his analysis doesn't work, I'd continue to give it some thought. For now, sticking with gold while the stock market tries to figure out where it wants to go is a sound play.
I'm not a subscriber to the report but am interested in looking at multiple views of the markets. Nichols' articles frequently show up on Kitco, Financialsense, or 321gold.
Once upon a time in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.
The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching. The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.
The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
While the man was away the assistant told the villagers. "Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again and once again there were monkeys everywhere.
Now you have a better understanding of how the stock market works.
I maintain that we are in what is called "chaos". After reading a number if explanations of chaos, most of them not particularly compelling, I've decided to ask for help from those of us that have a more classical training on economic theories. My understanding, in short, is that seemingly unexplainable results are the product of unanticipatable influences. If we could get some good training in chaos theory then we could possibly offer some postulations for consideration.
Would someone please offer your forumites some concise training in chaos theory as it pertains to economics?
"A new order comes out of chaos, try and be the person that leaves town with all the cash and no monkeys !!"
And there you have it. Now, if I could just find some of those monkeys...
My take on chaos is that you have to go on instinct and experience and not so much on models and technical explanations. The models and explanations must be seriously considered but your reaction to chaos should be grounded in what you see and what you feel as opposed to what you think and how you have been schooled; the response has to be instinctual and not intellectual. Greed, anxiety, fear have no place in a chaos environment because emotions have no place on the battle field and chaos is war. The solution should be simple, kind of like an Occam's Razor kind of way Occam's Razor Theory.
O.K. MH, If it is going to be a dept thought Sunday, here is my two cents worth.
There is no Chaos, and if it seems that way, it is only in our minds!
“In order for human kind to be able to make any change in any part of the material universe at least one thing is needed, a point in time called the PRESENT. Since mankind cannot go back and the changes the past, and cannot go forward and make changes the future, he must have a PRESENT in order to control his own destiny!
Even as far back as Aristotle who is quoted saying “In the times in which we live, there are no “nows”, scientists today realized that our current time continuum contains no PRESENT.
One year ago is in the past, one year from now is in the future, each time a second clicks by on one’s watch the last second is in the past, and the next second is in the future. There are no “nows” and the “nows” are the only time one might exercise free will to make any change in anything.
Therefore all of the decisions concerning the world were made before each event, and not by us. If the entire Universe moves on a pre-planned course then in the eyes of the mover everything is perfect, or it would be changed.
Our emotions tell us this is chaos, but in fact everything is perfect we just are not privileged to the plan.”
This is what David Nichols has to say on chaos and probability theory. He states that his methods work best in markets following parabolic and speculative trends...such as what gold has been doing the past 7 years. His website is linked via the article above.
Fractal Market Analysis
"Fractal market analysis" is a pioneering approach to the study of financial markets, using chaos and quantum theories to study and characterize the inherent predictability of financial markets.
Over the last 40 years, a language has sprung up to address what is happening in seemingly random natural systems -- such as the weather, and financial markets -- in order to study what may be predictable in such systems. This is chaos theory, which is trying to understand the order hidden within seemingly random chaos.
Fractal market analysis discovers and characterizes the order hidden within seemingly random financial markets, and determines the probability of future events.
A fractal pattern is a recurring pattern in a chaotic environment. A defining characteristic of a fractal pattern is that it is self-similar in all time-frames; that is, the smaller components have the same basic shape and pattern as the larger components. Financial markets are fractal in this way, as it is impossible to look at an unlabeled price chart and determine whether it is an hourly, monthly, or even a 5 minute chart of the trading action. They all look the same. Markets are fractal.
I've spent many years studying and researching the way that financial markets actually behave, using chaos theory and empirical observation in real-time of unfolding fractal patterns to characterize the way they move. I also have a proprietary fractal projection method which tells me in surprising detail how a market fractal pattern is going to develop.
The main advantage of knowing these fractal patterns and projections is they identify specific critical balance points where the potential energy may resolve in one direction or another. I can identify ahead of time where these points are, so I can know as early as possible where a market is going to go.
Interestingly, there is not much published in the field of fractal market analysis -- at least nothing of any real value. There are dispersed pockets of people working on these ideas -- most of whom I know -- but few publish their work, primarily because of the significant edge it is providing in financial markets.
I continue to be surprised about how there is still such a wide-open frontier in market analysis, in spite of the trillions of dollars, and the best and brightest minds around the globe devoted to the markets. It's my belief that 99.999% of all market participants are approaching the markets the wrong way and are not using the right set of analytical tools.
There is no direct relationship between the inputs into a market -- such as earnings, economic reports, liquidity, etc. -- and the output, which is the price. There is no proportional relationship. The markets have to be studied as chaotic, non-linear systems, yet almost nobody studies them in this way.
But over the next 20 years this will certainly change. Fractal analysis is pushing into the still-unexplored frontier of market thought, but it's my guess that in 20 years just about every market follower will be well-versed in many of these ideas. -- David Nichols
What troubles me, is that everything that the FED and the Treasury have tried
to do , has not had any impact at all. This may well be one of those events of a lifetime
that deconstructs all that we have come to know and trust. A new financial structure will
arise from the wreckage but it will take time, renewed protective regulations, massive
infrastructure rebuilding projects that will rival those of the great depression. We could
be facing a period of years for meaningful revival of the markets to occurre. Cash may well be
king in the next two years. >>
Nice one bear.
All metrics are obsolete...this is a "pair-o-dime" scenario with no rules.
I agree with you that out of this disaster we may "rebuild" what America was before the last two generations of greed. That may be very painful and may take more than a couple of years. Looking at the chart posted a few pages ago on the stock market since 1900, it looks like this sideways market which I believe began early this decade may have another 7 or so years to go...and because this is global it may take longer. In that 7+ years there will be a whole lotta pain. The picture will become more evident on November 5. Regardless who wins, what we will know is the speed at which socialism will conquer. And to add to what GS said...what do we do from here...after 11-4-08, we will have a better idea of how much time we have to get our "houses" in order.
On a similar note...I've been commenting on YouTube. Boy, there are some nasty dumb masses out there. I've been able to vent, constructively of course, and the fouled mouthed stuff I get from obvious Brand D makes this Marine cringe. Example, I have thrown out some tiny tiny little bombs like "liberal fascism" and I can't believe how many replies I get that this doesn't exist and there is not one who fills this description. There are many useful idiots that just don't know what is going on.
Comments
Yes, Ren...you're all over it. There are just so many things that can still be said about what we are about to see. Ultimately, people will have to go to PM or cash until this shakes out and it may take a while because there is a lot more BS out there than there is actual cash. This is going to be ugly but we've been saying that for a few years now.
Edited to add:Second round knock out by wells fargo There's more to this story than this but this is all we know.
<< <i>"There are still alot of us out there but our minority is so small now, I believe all we can do is stand and watch, very sad!"
Yes, Ren...you're all over it. There are just so many things that can still be said about what we are about to see. Ultimately, people will have to go to PM or cash until this shakes out and it may take a while because there is a lot more BS out there than there is actual cash. This is going to be ugly but we've been saying that for a few years now. >>
Another alarming point this afternoon was that I had to explain to the aforementioned pilot his question of "why gold?" He didn't get it because it goes up and down and what is it's wealth in this time of crisis. I explained to him that when Mr. Potter (It's a Wonderful Life) says I will give you 50c on the $1 when your bank is closed at least you have some gold to convert at some time when there is a new currency. I think the conversion may be more like $25US to $1GD (global dollar). And if you had gold it will hold up value, most likely. I gave him the examples of how oil is priced in dollars and now other currencies. I told him to look at the price of gold in other currencies. It's sad really, he is at least thinking about doing something where most are still wondering what Stars are still dancing. He then asked me if I was storing food....I said yes. He laughed. I told him it's not a cultural thing. I used to live at 10,250 in the Rockies and got snowed in for 6 days in a tiny town. All roads were blocked. My wife and I lived off of rice and other stuffs. I've been in other countries, recently Ethiopia, where food was scarce, shelves were empty. It can happen here.
OBTW, buy gold...if you can find it.
Ren
nationalized, massage parlors
pizza joints, bars and strip clubs?
Camelot
After the dust settles, all the trillions in losses are paid, the investment companies and hedge funds spend all their cash, and sell their assets, who is going to be left to invest in the American markets to affect a recovery?
Lehman to Spark Record Payout for Credit Swap Sellers (Update1)
By Shannon D. Harrington and Neil Unmack
Oct. 10 (Bloomberg) -- The collapse of Lehman Brothers Holdings Inc. may force Pacific Investment Management Co. and other sellers of credit-default swaps to make the biggest-ever payout in the $55 trillion market.
An auction to be held today will determine the size of the payments buyers of default protection can claim after New York- based Lehman filed for the largest bankruptcy with $618 billion in debt. Lehman's $128 billion of bonds were trading yesterday at an average of 13 cents on the dollar, indicating credit swap sellers may have to pay 87 cents.
The list of participants includes Newport Beach, California- based Pimco, manager of the world's largest bond fund, Chicago- based hedge fund manager Citadel Investment Group LLC, and American International Group Inc., the New York-based insurer taken over by the government, according to the International Swaps and Derivatives Association in New York.
Hedge funds, insurance companies and banks typically buy and sell credit protection, which is used either to insure a bond against default or as a bet against the company's ability to pay its debt. More than 350 banks and investors signed up to settle credit-default swaps tied to Lehman.
Banks can go to the Federal Reserve, or use the commercial paper market where it is still functioning'' to meet protection payments, said Cicione. ``But fund managers or hedge funds, once they've used their cash, have only one option, to sell assets.''
A unit of Primus Guaranty Ltd., a Bermuda-based company that has sold more than $24 billion in credit-default swaps, said last month it guaranteed $80 million of Lehman debt. The firm sold protection on $215 million of Fannie and Freddie debt and $16.1 million on WaMu. Yesterday, it said it also had made bets of $68.2 million on Kaupthing Bank hf, which the Icelandic government seized.
Primus said last week it had $820 million in cash and liquid investments to meet claims on the contracts.
This is a global problem. So your question should be, "Who is going to invest in the world?" And before someone answers with "India and China are growing 15% per year", you better do some homework.
Knowledge is the enemy of fear
Box of 20
Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'... MORE
<< <i>We need to let the financial system collapse with no bailouts and rebuild again. Let the American people take everything out of the stock market and save what they can. The trillions from the Fed should be reinvested in U.S. infrastructure (Rebuild factories, so we can become less dependent on imports) and new sources of energy(less dependent on foreign oil). Invest in infrastructure and true solid American companies like Proctor and Gamble and other companines that provide staples for the American people, not financial vehicles that prove worthless. America has lost its common sense. >>
pf70
I think you are right. I'm sure it's the only way to kill off the socialist stranglehold that is currently on America. There may be other methods, but there's nothing like a full collapse to get "their" attention. Unfortunately, the sheeple will flock to the first eloquent leader to show the new way instead of rediscovering the Constitution.
Ren
<< <i>From the DrudgeReport:
Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'... MORE >>
Wow, Heres the link to the bloomberg article
In 1929 the DOW traded at 4.2x book value. In 1932 the DOW traded at 0.5x book value. In 2007 the DOW traded at 4.3x book value.
Knowledge is the enemy of fear
TT,
The point to my question earlier in the week was directed to this subject.
Who will be left to play in this market to drive the prices back up?
So much of this market has been driven by speculation that much of that speculation is now the very force to drive the market downward.
Look at this example:
Chesapeake Energy Corp. (CHK:US): The petroleum producer said Chief Executive Officer Aubrey McClendon involuntarily sold ``substantially'' all of his shares in the company over the past three days to meet margin loan calls. The stock fell 6.7 percent to $16.52 in regular trading.
CHK: was trading at $68 just a few months ago.
Not only has our stock market turned into the biggest gambling hall in the world, but also much of this has been done with credit!
Once all this is over who will be left to re-inflate the bubble?
The Boomers are about done, they no longer have a “long term” horizon, and it has taken 7 years to recover this market from the 2001 crash.
No doubt many of the thousands of hedge funds will go out of business.
The investment banks are all gone.
More Federal taxes will have to be added next year, no matter who is in charge, to pay for the on going mess, and younger working peoples budgets are already strained.
Credit cards, bank lines, and home ATM’S are shrinking or gone.
Millions of the folks are just throwing the javelin in the pond and refusing to play anymore.
I think to Dave’s point, those that do venture back into the market will be looking for stocks that pay high dividends, and have very low book to price values.
The time frame is true but most people aren't aware of it. Most think the market recovered and soared in the 1940's. All they know is that the recent super-bull that began in 1981-1982 that never had a complete washout. With about 20-26 years depending on how you count the peak, that old bull was long in the tooth. And the flip side is that it's a long time before another peak occurs. The stock market did cycle up and down a couple of time in the 1930's such that traders could make money if properly positioned.
Stocks were in a bull market until around 1966 and then cycled basically nowhere (as inflation destroyed real returns) until 1982...16 years down. Traders made money, the buy and hold types did not.
The overhang of $1.125 QUADRILLION in derivatives ensures that this is not going to be 1987.
roadrunner
<< <i>.... that from the crash of 1929 it took until 1954 before the market came back from it's peak although I haven't researched this. That's not saying any new money didn't make $$$ in those decades just money that was already in the market. Boy if that's the case I don't think many of us could wait that long to get their money back...
The time frame is true but most people aren't aware of it. Most think the market recovered and soared in the 1940's. All they know is that the recent super-bull that began in 1981-1982 that never had a complete washout. With about 20-26 years depending on how you count the peak, that old bull was long in the tooth. And the flip side is that it's a long time before another peak occurs. The stock market did cycle up and down a couple of time in the 1930's such that traders could make money if properly positioned.
Stocks were in a bull market until around 1966 and then cycled basically nowhere (as inflation destroyed real returns) until 1982...16 years down. Traders made money, the buy and hold types did not.
The overhang of $1.125 QUADRILLION in derivatives ensures that this is not going to be 1987.
roadrunner >>
The mother of all trading opportunities occur during bear markets. You had at least 2 years of 100% returns in the early part of the last century. A 5 fold rally from 1932-1936. And several 30-60% trades in the 70's. Just as there was a 100+% return from 2003-2007. I think there will be some MONSTER trades in this market over the next 5-10 years, but you must keep your powder dry.
Knowledge is the enemy of fear
Log charts with annualized rates are cool because they don't show how severe the most recent falls are. On this chart the recent drop from 14,000 to 8,500 looks like a walk in the park. Good thing they started with DOW at 10,000 in Jan 2000 rather than DOW at 14000 in 2007 or the annualized rates would be in the -30% to -40% range.
roadrunner
<< <i>Note that the 1.5% and 3.7% drops in the DOW during the last 2 bear markets are not inflation adjusted. They would look far different otherwise.
Log charts with annualized rates are cool because they don't show how severe the most recent falls are. On this chart the recent drop from 14,000 to 8,500 looks like a walk in the park. Good thing they started with DOW at 10,000 in Jan 2000 rather than DOW at 14000 in 2007 or the annualized rates would be in the -30% to -40% range.
roadrunner >>
Not sure they need to be inflation adjusted? Since the % drop is based on what the current dow level is when the drop occurs?
Another way to inflation adjust the Dow's paper gains up to 2007 is to ratio it against the USDX, gold, or CRB index.
roadrunner
WSJ article
Via article in today's WS
i thought it was interesting as it considers the G7/8 meetings
it also smells of inflation if implemented but that is really a given?
I have agreed with most of you on this thread for many years now, I have been a good gold bull and have been hoarding since 2003 . PMs are a greater % of my net worth than they are meant to be (according to the pundits), I am essentially debt free and my only exposure to the stock market is in my defined benefit plan which I can only use in another 20 years.
Having said this I think it is time for a change of plan .
I spent most of my life in a country where the inflation rate was 15% ++ and I think that the same will apply here for the next few years/decades.
The success stories in an environment like this depend on leveraging into hard assets.
None of us can predict the bottom , in the stock market , property market, interest rate market,or any other market for that matter , but I think that we can all agree that we are closer to the bottom than we are to the top .
Now is the time to start diversifying into these markets, one can borrow money now at 7.5% and earn dividends of 12+ %, we can buy property at 6% knowing with certainty that the value of the dollar is going to deteriorate and that our payments will seem trivial in 10 years time.
Just my humble opinion ...personally I am starting to nibble at stocks (commodity stocks mainly) and trying to get a loan for property that I plan to rent out. I will hold onto some of my PM holdings just because they guaranteed a good nights sleep these last few weeks when the worlds wealth was cut by so many trillions.
I agree with this;
“All investments should be inflation adjusted to show how they performed in real terms. Even a nominal 3% inflation per year from 1996 to 2007 should be subtracted from the equation (over 30%). This would make the Dow gain from 10,000 to 14,000 more accurately reflect a false "gain" due to a loss in value of the dollar.
Another way to inflation adjust the Dow's paper gains up to 2007 is to ratio it against the USDX, gold, or CRB index.”
In addition lets not forget how the DOW boys fix the game of averages by deleting weak companies and replacing them with strong ones !!!!
How many DOW companies have already been replaced this year, and how many are on the verge?
In this battle to pick investments, the public battling the traders and the pros, is a game similar to bringing a 3-inch knife to a gunfight.
Just an observation, but we may see markets going forward for a few weeks or months that act much like the market did on Friday moving 1,000 points in all directions.
This reminds me of that kids game “whack the mole” where you try to beat your opponent buy whacking the plastic mole that pops up the fastest. This is a little different in that it is click the mouse. I noticed last week that some brokers might be better than others in this game. Scottrade generally has a 4 second time to complete a transaction, but last week one of my trades took a whole minute. There is no way I can compete so I am out, Ha Ha
“Hopefully we can have some kind of celebration and I was thinking'; maybe we could have a post your metal day and we can just post metal all day starting with the 10,000th post? Just a thought but you've heard the term all hat and no cattle well, here's a time to post your metal.”
Good suggestion
MH
You don’t really think that all the folks that read this each day think we are not smart enough to take our own advice?
Mhammerman great idea!....i will participate.
BTW texast posted my hoard of bricks earlier in another thread! hehehe (i wish) so all i will post is PM coinage
“Now is the time to start diversifying into these markets, one can borrow money now at 7.5% and earn dividends of 12+ %, we can buy property at 6% knowing with certainty that the value of the dollar is going to deteriorate and that our payments will seem trivial in 10 years time.”
JF
I agree somewhat with this but I think that first and foremost an investor must do their own research, and take no advice form brokers.
Second one must be very careful with margin, look at the case in point on Chesapeake Energy Corp. (CHK:US): above.
In addition look to what has happened to some of Peter Schiff’s investments in the Canadian oil trusts,
Harvest Energy Trust HTE:NYSE is down from $30 to $8 and is now paying a 41.63% dividend.
Same situation with Pengrowth Energy Trust PGH:NYSE, or Excel Maritime Carriers Ltd EXM:NYSE.
These great companies are all in the toilet because the Hedge funds, etc. had margin calls and were forced to dump them, and who knows what is left to dump?
Every move down causes more forced selling.
I bought some HTE at $14 and it was paying a dividend of 16%. I considered loading up my margin account with the stuff as my margin rate was 8%. How could you lose??
I did not do that and a good thing as the stock is now nearly in half!!
One thing that we do need to start thinking about is where do we go from here?
We have all been pretty correct in our over all thinking the last four years, and the crash is happening before our eyes.
We started this thread just to keep each other informed, but now I think we now have a duty to give at least suggestions to those hundreds, or perhaps thousands of folks that now read this thread.
I do not think we can predict that this calamity will be like anything we have ever seen in our 232-year history. Our current economy is far different that any we have had in the past.
First of all, we are more of a Socialist country that at any time in our history.
Second, huge amounts of the population, business as well as individuals, are already reliant on the Federal government this will only get worse in the coming 15 months.
Third, The amount of money been created during this crises will equal enough new debt to fill up 5 years of indebtedness in the most recent past.
Forth, huge consolidations will continue in the business world, car companies will be
Nationalized, or merged, with government guarantees etc.
What this is looking like is a deep recession followed by a sever inflation period. If that is indeed the case there is still time for the folks to get their act together.
I know that when we started this thread, and began telling the public that the government debt, the derivative markets, the pork in Washington was not sustainable, most folks just laughed, and went on their merry way.
I think those of us preaching common sense investing, and tempered use of credit now have their attention.
So where do we go from here?
I'd sure like to see break downs of the DOW since they drop and add stocks all the time, it's a distorted chart when you not tracking the same companies like you do with gold. If we could have sub'd Rhodium for gold the PM's would have looked like world beaters. I have a document linked somewhere that gives every change in the DOW since 1900, I may have to find it and post it for those interested.
I'd like to share a site address for Hoisington Managment Group, Headed by Lacy H. Hunt PHD.
These gentlemen provide a very definitive quarterly review and future out look for the U.S. and world economies.
They do not speak directly toward pm's, but mention them now and again.
They do provide an in depth studious and qualitative analysis of a myriad of economic data and concisely present it in laymens terms
complete with graphs and charts and long term data.
I have followed them for years and have found them very accurate in their outlooks.
Its worth a look, its free, Just go to WWW.HOISINGTONMGT.COM and click on Economic Overview. You can click on back issues and check their
accuracy.www.hoisingtonmgt.com
I'd like to share a the site address for Hoisington Managment Group, Head by Lacy H. Hunt PHD.
These gentlemen provide a very definitive quarterly review and future out look for the U.S. and world economies.
They do not speak directly toward pm's, but mention them now and again.
They do provide an in depth studious and qualitative analysis of a myriad of economic data and concisely present it in laymens terms
complete with graphs and charts and long term data.
I have followed them for years and have found them very accurate in their outlooks.
Its worth a look, its free, Just go to WWW.HOISINGTONMGT.COM and click on Economic Overview. You can click on back issues and check their
accuracy. www.hoisingtonmgt.com
I do like selected resource stocks as a rule. They will prosper in the next market rebound. Some of the gold miners are at absolutely stupidly low levels for companies that are making excellent profits. In this environment, gold and precious metals still have a vital safety role to play. The collector in me has always liked generic slabbed gold, esp $20 Saints and Libs. The premiums right now are too high for my taste so I'm currently watching.
roadrunner
Things have already changed in many ways and an investor should at least have a plan for the future and start moving in that direction .
Resource stocks and utiilities and commodities have all been thrashed with the rest of the market . A lot of these are paying double digit dividends and the underlying source of these profits is still intact to a large degree.
One could lock in the high yield as well as take advantage of the future bounce in these stocks even if they bounce back to 50% of their highs of a few months ago .
At some stage in the near future the shorts will turn bullish and this thing is going to fly.
Thanks for your post,
Here is part of their statement in the “overlook for the 2nd quarter of 2008”
This will be the question to challenge the minds here, inflation or deflation, or perhaps both?
HoisingtonMgt.com
Quarterly Review and Outlook
Second Quarter 2008
“The fixed income investment conclusion is that inflation is endemic, and since the market does not currently reflect such dire inflation prospects, long dated Treasury securities should be sold. We would be among the first to move to the short dated part of the curve if the economic statistics supported the above view. Our conclusion is that deflation, not inflation, is, and will continue to be, the essential problem for the U.S.”
What is deflation and how can it be prevented?
Influencing interest rates is a commonly used method of reducing inflation or avoiding deflation. Gongloff at CNN Money sites a Federal Reserve study that says "Japan's deflation could have been dodged, for example, if the Bank of Japan (BOJ) had only cut interest rates by 2 more percentage points between 1991 and 1995." Colin Asher points out that sometimes that if interest rates are too low, this method of controlling deflation is no longer an option, as currently in Japan where interest rates are practically zero. Changing interest rates in some circumstances is an effective way of controling deflation through controlling the money supply. We finally get to the original question: "Is the problem that there is more to printing money than printing money? Is in fact the way printed money gets into circulation, that the fed buys bonds, and thus gets money into the economy?". That's precisely what happens. The money the Fed gets to buy government securities has to come from somewhere. Generally it is just created in order for the Fed to carry out its open market operations. So in most instances, when economists talk about "printing more money" and "the Fed lowering interest rates" they're talking about the same thing. If interest rates are already zero, as in Japan, there is little room to lower them further, so using this policy to fight deflation will not work well. Fortunately interest rates in the U.S. have not yet reached the lows of those in Japan.
After gold's retest then it's time to head for a new high. We may already have done that but I think a retest down further to $800 is still quite possible. The fractal dimension that gold has currently built up is quite high. Silver is not far behind. If you've been following this analysis over the last 12 months you'd know that Nichols has been dead on with his gold calls, both up and down. He called all 3 of the major corrections this year. Until his analysis doesn't work, I'd continue to give it some thought. For now, sticking with gold while the stock market tries to figure out where it wants to go is a sound play.
David Nichols Fractal Analysis report
I'm not a subscriber to the report but am interested in looking at multiple views of the markets. Nichols' articles frequently show up on Kitco, Financialsense, or 321gold.
roadrunner
Subject: Monkeys
Once upon a time in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.
The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching. The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.
The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
While the man was away the assistant told the villagers. "Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again and once again there were monkeys everywhere.
Now you have a better understanding of how the stock market works.
can you settle your Comex Au in physical?
Would someone please offer your forumites some concise training in chaos theory as it pertains to economics?
And there you have it. Now, if I could just find some of those monkeys...
My take on chaos is that you have to go on instinct and experience and not so much on models and technical explanations. The models and explanations must be seriously considered but your reaction to chaos should be grounded in what you see and what you feel as opposed to what you think and how you have been schooled; the response has to be instinctual and not intellectual. Greed, anxiety, fear have no place in a chaos environment because emotions have no place on the battle field and chaos is war. The solution should be simple, kind of like an Occam's Razor kind of way Occam's Razor Theory.
Edited to add: #11. #11
JMHO
Intuition isn't relevant without first having experience and expertise, but an intuitive approach is sometimes helpful.
I had the same feelings about precious metals in 1978, but it seems to me that the driving forces in the market are much different now.
Same feeling, different root causes. Focus on fundamentals. Technicals will screw you in the end.
"Trust your feelings, Luke."
I knew it would happen.
Gold rush...not!
Got safe?
If it is going to be a dept thought Sunday, here is my two cents worth.
There is no Chaos, and if it seems that way, it is only in our minds!
“In order for human kind to be able to make any change in any part of the material universe at least one thing is needed, a point in time called the PRESENT. Since mankind cannot go back and the changes the past, and cannot go forward and make changes the future, he must have a PRESENT in order to control his own destiny!
Even as far back as Aristotle who is quoted saying “In the times in which we live, there are no “nows”, scientists today realized that our current time continuum contains no PRESENT.
One year ago is in the past, one year from now is in the future, each time a second clicks by on one’s watch the last second is in the past, and the next second is in the future. There are no “nows” and the “nows” are the only time one might exercise free will to make any change in anything.
Therefore all of the decisions concerning the world were made before each event, and not by us. If the entire Universe moves on a pre-planned course then in the eyes of the mover everything is perfect, or it would be changed.
Our emotions tell us this is chaos, but in fact everything is perfect we just are not privileged to the plan.”
Is really like trying to catch a falling knife. This downturn is just not
your' father's cyclic recession downturn. This humdinger,.,hndxccs,.j;'dsafrf;1w20ud is a world wide
melt down. While financial experts keep saying we are approaching
some sort of a bottom, I have my doubts. With possible toxic financial
instruments of some 70 trillion dollars, it is quite possible for the markets
to fall another 20% or more. In addition to the financial meltdown and the
loss of public confidence, we have an impending recession of undetermined
severity. It may prove more prudent to wait for the market to hit bottom and
begin to start its upward climb. Remember, a 50% drop will require a 100%
increase to break even.
What troubles me, is that everything that the FED and the Treasury have tried
to do , has not had any impact at all. This may well be one of those events of a lifetime
that deconstructs all that we have come to know and trust. A new financial structure will
arise from the wreckage but it will take time, renewed protective regulations, massive
infrastructure rebuilding projects that will rival those of the great depression. We could
be facing a period of years for meaningful revival of the markets to occurre. Cash may well be
king in the next two years.
Camelot
Fractal Market Analysis
"Fractal market analysis" is a pioneering approach to the study of financial markets, using chaos and quantum theories to study and characterize the inherent predictability of financial markets.
Over the last 40 years, a language has sprung up to address what is happening in seemingly random natural systems -- such as the weather, and financial markets -- in order to study what may be predictable in such systems. This is chaos theory, which is trying to understand the order hidden within seemingly random chaos.
Fractal market analysis discovers and characterizes the order hidden within seemingly random financial markets, and determines the probability of future events.
A fractal pattern is a recurring pattern in a chaotic environment. A defining characteristic of a fractal pattern is that it is self-similar in all time-frames; that is, the smaller components have the same basic shape and pattern as the larger components. Financial markets are fractal in this way, as it is impossible to look at an unlabeled price chart and determine whether it is an hourly, monthly, or even a 5 minute chart of the trading action. They all look the same. Markets are fractal.
I've spent many years studying and researching the way that financial markets actually behave, using chaos theory and empirical observation in real-time of unfolding fractal patterns to characterize the way they move. I also have a proprietary fractal projection method which tells me in surprising detail how a market fractal pattern is going to develop.
The main advantage of knowing these fractal patterns and projections is they identify specific critical balance points where the potential energy may resolve in one direction or another. I can identify ahead of time where these points are, so I can know as early as possible where a market is going to go.
Interestingly, there is not much published in the field of fractal market analysis -- at least nothing of any real value. There are dispersed pockets of people working on these ideas -- most of whom I know -- but few publish their work, primarily because of the significant edge it is providing in financial markets.
I continue to be surprised about how there is still such a wide-open frontier in market analysis, in spite of the trillions of dollars, and the best and brightest minds around the globe devoted to the markets. It's my belief that 99.999% of all market participants are approaching the markets the wrong way and are not using the right set of analytical tools.
There is no direct relationship between the inputs into a market -- such as earnings, economic reports, liquidity, etc. -- and the output, which is the price. There is no proportional relationship. The markets have to be studied as chaotic, non-linear systems, yet almost nobody studies them in this way.
But over the next 20 years this will certainly change. Fractal analysis is pushing into the still-unexplored frontier of market thought, but it's my guess that in 20 years just about every market follower will be well-versed in many of these ideas. -- David Nichols
roadrunner
What troubles me, is that everything that the FED and the Treasury have tried
to do , has not had any impact at all. This may well be one of those events of a lifetime
that deconstructs all that we have come to know and trust. A new financial structure will
arise from the wreckage but it will take time, renewed protective regulations, massive
infrastructure rebuilding projects that will rival those of the great depression. We could
be facing a period of years for meaningful revival of the markets to occurre. Cash may well be
king in the next two years. >>
Nice one bear.
All metrics are obsolete...this is a "pair-o-dime" scenario with no rules.
I agree with you that out of this disaster we may "rebuild" what America was before the last two generations of greed. That may be very painful and may take more than a couple of years. Looking at the chart posted a few pages ago on the stock market since 1900, it looks like this sideways market which I believe began early this decade may have another 7 or so years to go...and because this is global it may take longer. In that 7+ years there will be a whole lotta pain. The picture will become more evident on November 5. Regardless who wins, what we will know is the speed at which socialism will conquer. And to add to what GS said...what do we do from here...after 11-4-08, we will have a better idea of how much time we have to get our "houses" in order.
On a similar note...I've been commenting on YouTube. Boy, there are some nasty dumb masses out there.
rant out
Ren