Financial topics

[John]

** 16-Nov-2019 World View: Stock Market Bubble and Correction

> The Dow has got to 28 000 and on a historic P/E basis is amazingly
> high!

> Even if you think that there won't be a substantial correction,
> from a high base you are not going to get a large percentage
> return going forward. Simple math. I am amazed the stock market of
> the last 10 years. I was, and still am expecting the Dow to
> correct to below its 2001 peak of about 11 400. At 28000 that
> would be a correction of 59%

You're being wildly optimistic. Here's my DJIA history page:

** DJIA Historical Page
** http://www.generationaldynamics.com/pg/ ... i.djia.htm

The DJIA is currently around 300% of its historic trend value.

It's been above trend value almost continually since 1989, after
recovering from the false panic of 1987.

It's been above 200% of trend value almost continually since
the "irrational exuberance" of 1996. Even the Nasdaq crash
in 2000 barely dented it.

The financial crash of 2008 did dent it a bit, bringing it down to
about 130% of trend value. However, by 2013 it was back above 200% of
trend value by 2013.

It's been around 300% above trend value almost constantly since
January 2018.

This bubble is so huge and has lasted so long, that there are few
people in the world (outside of the Generational Dynamics web site)
who have a clue what's going on.

Your estimated correction of 59% would seem huge and ridiculous to all
the mainstream analysts and politicians, but it's wildly optimistic.

If the DJIA were simply to return to its trend value (from 300% to
100%), there would be a 67% correction.

However, that's not what's going to happen. The Law of Reversion of
the Mean says that in return for the 20 years when the DJIA has been
above trend value, it must be below the trend value, long enough and
deep enough to balance out the 20 years above. And if it overshoots,
as it almost certainly will, then the result will be even lower.

In 1928-33, the DJIA fell 90%. That seems likely to be repeated.

The following graph, which hasn't been updated since 2010, illustrates
all of the above:

• DJIA -- 1900-August 2010 - with exponential growth trend
  curve - Log scale

The S&P 500 Price/Earnings ratio is currently around 20, far above its
historical average of 14. Once again, The Law of Reversion of the
Mean applies.

I haven't updated the following chart since 2015, but it shows the
situation:



The blue line shows the historic average, around 13.9. The P/E ratio
has been above the historic average, sometimes way above, since the
1990s. By the Law of Mean Reversion, it will have to fall an
equivalent amount below the historic average to maintain the long-term
average. It fell to the 5-6 range three times in the last century, in
1917, in 1949, and in 1980. That's going to happen again with
absolute certainty, and that means that the Dow Jones Industrial
Average will fall below 3000, from its current level of 26000.

Once again, this implies implies a 90% correction. 59%? It's time for
you to remove your rose-colored glasses.

[aeden]

Zamolxe of Dacia was assimilated into Mithraism.

I do not discount either of your math skills in value to the intrinsic value of paper which is always zero.
I think the hand writing on the wall was a testimony as who is in actual control in the divine comedy we witness.
Some value prevailed even as Plato mocked Socrates awaiting another political murder to the allegory of the cave and shadows on the wall.

Only one at a time to they regain their senses if they survive.

[aeden]

Government statements said the plan is to divert the funds in order to make cash payments to low-income households.
In Gaza, Syria and in Hezbollah occupied Lebanon.
https://www.zerohedge.com/s3/files/inli ... k=gD57ZWjl
The Arc of instability runs its course.

My initial bias route was the 1974 paper from Mr. Harold Vance was linear function cost analysis which in concept was non linear as
we know in Pareto functions we seen coming.
Even before April 1974 back to 1961 the tide has barely begun to turn.
The New World Order will have to be built from the bottom up rather than from the top down ...
but an end run on national sovereignty, eroding it piece by piece will accomplish much more than the old-fashioned frontal assault."
Richard Gardner - Council on Foreign Relations Journal, April 1974, Page 558

When my Mothers Dad left Europe in 1918 he conveyed lessons they will learn the hard way.
He was essentially correct on what was coming to these shores.

http://gdxforum.com/forum/search.php?ke ... sf=msgonly

Still they deny it on the Body Farm.

August Landmesser also knew the true hour he was in.

[aeden]

https://www.zerohedge.com/s3/files/inli ... k=b7qCJuWF

Cracker Joe mushroom cult cloud.
The current Office took the job because they knew what is coming.
The IYI never cared what was coming we tried to clean up even locally.
I agree locally only one by one they only regain their sanity.

Another lawsuit locally from an actual competent victim of reverse discrimination against
the actually ruling cult Demtardians under way.
Chances are She will get whitewashed from the room temperatures
elected in. Wasted resources and delay costs to real damn problem on the way and already here
as we turn the corner.

https://www.youtube.com/watch?v=ProSDm2eGjk

We are rounding up strays to supply food needs in the rural community as these local fools waste it on legal fees
for idiots in charge.

[aeden]

https://www.youtube.com/watch?v=IDTMb2VwF6w

we want our money back

[Higgenbotham]

Another way of showing the massive overvaluation. I particularly like this graph because it captures so much all at once.

[aeden]

Mon May 19, 2014 1:19 am
When asked what he thought of the experiment, he responded succinctly with: If you have bananas on a pole, you'll lose your bananas. Meeting dismissed.

These thin sliced excursions are all calibrated. Ukraine - China Sea - Arc of instability just as the hammer of justice below to common people over there or the latex gloves here. I do not think there ever is a impartial voice since rest assured the monkeys are killing people as they climb over the bodies for the bananas on a pole. Tough things about facts is they cannot be diluted. As we are warned from FDR there are NO accidents.

America was used by the rent seeking elite to expand the central bank system around the world. With this system now fully in place the US will be used as the bad guy paradigm to gather the world within the structure of a centralized multilateral system which may or may not “self limit” rent seeking and allow for a bi-directional transfer of wealth based on fundamental economic and humanitarian principles.

Just as we had been warned from old.

“ Success has a great tendency to conceal and throw a veil over the evil of men. ” — Demosthenes

Russia is taking the lead role in the dollar destruction script so China can maintain a level of approachability for the restructuring.

Some of the challenges to having an SDR reserve system is encouraging the private markets to trade in SDR denominated assets. This is where the overall allocation of a countries or regions SDR composition will come into play. The inevitability of oil, gold, coal, wheat, rice, etc.., being priced in SDR’s will become more obvious as the new system emerges further.

Hayek further warned: if you do not trust the market, then you no longer believe in freedom or capitalism. In that event you are a socialist on the road to serfdom.

https://www.zerohedge.com/geopolitical/ ... er-5-words

Ask them as we did what is going on and they told us point blank. Day care center for criminals and one was going into education but the "savages run the prison". Impossible to convey how broken and disgusting it truly is. I will have then type a paragraph to what is and why education is terminal they said. Rent seeking waste of money.

We simply know what, and why a effective tax rate of twenty percent is sane and half of these dimmcrats parasites to vanish. Any idiot understands the asian land war thought map and the arc of instability construct as we are anyways.

For lagging local markets expect city taxes to rise and eat another level of capital now since those left standing will be targeted with a larger straw stuck in them. Its here as we warned and another level of attack cannot be denied. Even the Dimmocrats are waking up to the 2014 effect we noted a few pages back.
As we noted the liberal left attack dogs are deployment constructs. I will not repost that book link since we know what it is here.
Circles as was conveyed also to render no man status. It was conveyed not one in a million will see the veil. Tue Oct 29, 2013

Government is paid for by the private sector period. Whether by borrowing money which sucks resources out of the bond market or by printing money which impoverishes private sector savers by keeping interest rates artificially depressed or by old-fashioned taxation, the government finances its spending by taking from the private sector. It is just that simple and the private market will vanish as will you when the tyrants control every facet since it is not moral hazard but moral ineptitude of voters.

thread: Zimmermann Telegram

[richard5za]

Another way of showing the massive overvaluation. I particularly like this graph because it captures so much all at once.

Thank you John and Higgenbotham for your insights

We are agreed that the market is in a bubble> I have a slightly different view of matters based upon work done by Crestmont Research. Its worth a view and you'll find it easily enough with google.

So I look at the trends of the P/E ratio. Crestmont calls then secular cycles, from seclum meaning era. From 1900 to 2001 there were 4 up trends and 4 down trends; or 4 up eras of P/E ratios and 4 down eras of P/E ratio.

My view is that the 80's and 90's bull moved to bubble in the second half of the nineties. This was the final P/E ratio uptrend of the 20th century. When the Dow peaked at some 11 400 in 2001 one would normally expect a P/E ratio down trend. A new secular era of P/E ratio down trend.

Historically the P/E ration goes below 10, and even as low as 5, before the next P/E ratio up trend can start (This is the time to buy. If you look at the math the big growth in stock price is not earnings growth but P/E ratio change)

So the P/E ratio downtrend started in 2001 but the market has been manipulated since then by the Financial Bubble and then then the Central Bank bubble as Higgenbotham's chart clearly shows.

I accept that the P/E ratio will fall below 10. Now it depends a bit on how you calculate the P/E ratio. Lets say the Dow P/E is 30 currently. At 10 the math takes the Dow down to 9 330. At P/E ratio 5 (unlikely) its 4 665, at 8 (more likely) 7 466. If economic collapse accompanies the P/E ratio correction then anything is possible. Also war with China is another wild card.

So we are all agreed that having money in the market is a bad idea. And no doubt we don't want the risk and trauma of trying to get money out of the market once the turn happens. But we don't know when the correction will happen. I thought that it was going to happen more than 10 years ago, but human manipulation knows no limits.

So any ideas on where savings should be in the interim?

[aeden]

z scores
https://seekingalpha.com/insight/cef/ar ... l-elevated

Unless you trade options and get your chips off the table by close you are and have been the target.

80% of all day traders quit within the first two years.
Among all day traders, nearly 40% day trade for only one month.
95% of all traders fail.

Unless you trade with ai indicator scripts the locust in 40 millisecond bear raid will target direction and your finished in retail trading
for over a decade. IP sniffers for input strings are only allowed for PRISM traders.

Higg is the exception outlier as a bot slayer.

Have some one explain a 400 percent decrease in labor input and 300 percent alleged aggregate market bubble.

They cannot.

Contagion has spread from manufacturing to services as the labor pool flooded in design and
the increasing segregation of the knowledge base. As we reported robots replaced all of them and the quality control
humans are allowed to inspect the SOE production chains.

The point is simple. If its not already private nobody would want it anyways as a public offering.

There were 151,945,000 jobs in the US in October 2019 according to the CES survey of employers. The CPS survey of households showed 158,510,000 employed persons for the month. The US added 128,000 jobs in October 2019 according to the CES survey while the broader CPS employment measure rose by 241,000. (Comparing CES and CPS employment numbers.)

The rub is this locally and the brain dead will piss and moan and play the race card ad nauseum.
Of my Black friends which I despise that term black since they are friends will not work for Black Contractors.
We are talking about 1099 workers that always get paid by the the White Christian Employers.
He has no shortage of work and the labor supply because he pays them straight up.
Art is pushing 200K working alone and remodeling clients rooms as a simple example alone.

In the spring we are to increase our local farm production after shuttering for many reasons.
The demand is real and we avoid all trendy democrats point blank.
Facts are always color blind and always will be.
The wife is working the harvest in souls that needs food and transportation as some recently released
from medical care who would starve. The new van I had rebuilt now in perfect condition from a friend in scripted
investing I would label as bias routes or white papered as behavioral economics has filled a simple private network need.
Nobody but you can change any direction at any time. I guarantee they will not listen anyways.
That is your helmet of salvation also.

An overwhelming number of analysts found that it would be challenging for the US to restore its market share in China.
No kidding since locally they got wiped out to varying degrees as always.
No body remembers when we had to let the ground freeze to pick corn in December either.
That was years ago so no one should care anyways and did not then either.
America’s biggest customers are Mexico, South Korea, Japan, and Colombia.

https://www.ers.usda.gov/data-products/ ... forecasts/
Last updated: Thursday, November 14, 2019

Data and sources
The futures forecast model requires the following data:
● Weekly and monthly futures prices of the nearby contract by marketing year. Daily settlement prices by contract for wheat are obtained from the CMEGroup, Kansas City Board of Trade (KCBOT) for marketing years 1975 to the present. For information on how to obtain current wheat futures data from the CMEGroup, KCBOT, see:
http://www.cmegroup.com/trading/product ... se&group=2
For information on how to obtain historical wheat futures data from the CMEGroup, KCBOT, see:
http://www.cmegroup.com/market-data/dat ... ical-data/

● Monthly and annual farm prices received by marketing year. Obtained from Agricultural Prices, published by USDA's National Agricultural Statistics Service. For the publication, see:
https://usda.library.cornell.edu/concer ... /c821gj76b

● Monthly basis values by marketing year. Monthly farm prices received less monthly average futures settlement prices from the nearby futures contract.

● Monthly marketing weights by marketing year. Marketing weights by month are derived from data published in USDA's December Crop Production for marketing years 1975-77 and the annual issue of Agricultural Prices thereafter. For the most recent year's monthly marketing weights see Agricultural Prices:
https://usda.library.cornell.edu/concer ... /tm70mv177
https://usda.library.cornell.edu/concer ... /c821gj76b
● Monthly season-average price received projections from WASDE. Price projections from USDA are from World Agricultural Supply and Demand Estimates (WASDE), published by USDA’s World Agricultural Outlook Board. For the publication, see:
https://www.usda.gov/oce/commodity/wasde/index.htm

● Policy parameters (target prices, national average loan rates, direct payment rates, counter-cyclical payment trigger prices, and reference prices). Updated loan rates are obtained from the 2018 Farm Act. Reference prices are taken from the 2014 Farm Act. Other policy parameters from the 2002 through 2008 Farm Acts are taken from the legislation. For more information see below:
https://www.ers.usda.gov/agriculture-im ... -programs/
https://www.ers.usda.gov/topics/farm-ec ... s-title-i/
https://www.ers.usda.gov/topics/farm-ec ... arm-bills/

Forecast procedures
The forecast period for each marketing year covers 16 months, beginning in May, four months before the start of the year, and concludes with August, the last month of the marketing year. The forecast period is similar for both the futures model forecast and USDA’s WASDE projections. Model forecasts are made weekly, relying on Thursday's settlement futures price, but are reported once a month.

[Higgenbotham]

80% of all day traders quit within the first two years.
Among all day traders, nearly 40% day trade for only one month.
95% of all traders fail.

Higg is the exception outlier as a bot slayer.

I'm continuing to smash the bots in the futures markets. For the past several months, I have averaged one or two losing days per month day trading the futures. However, as you know, I am also holding a large short position that is losing money. As a result of that, I am now down versus where I was in May, but not by much. Since May 3, the S&P futures are up 170 points and I have lost 7 points. But the rise has been slow and if it accelerates in blowoff fashion, my losses will steepen almost for sure.

My broker (who has been in the business close to 3 decades) has told me several times that I am the only client he has ever had who can successfully day trade the market and there is nobody else he has seen try who has even come close. That's the real world. Successful day traders are extremely rare. And, like I said, I have not been able to beat the market and will not be able to unless it collapses while I am holding a large short position. That remains to be seen and I believe there is still a reasonable chance that they will take me out.