Financial topics

[aedens]

http://www.yardeni.com/pub/peacockbullbear.pdf

As you already know I am heading to neck lines numbers only light switch energy baskets. God speed and be careful.
May mercy and His thoughts be with us all.

http://www.youtube.com/watch?v=YYjBQKIOb-w

[Higgenbotham]

http://www.yardeni.com/pub/peacockbullbear.pdf

God speed and be careful.

George summed it up well in the interview link where he said this is the most dangerous type of stock market pattern. Will see if I can dig that up and take another listen.

http://www.stockindextiming.com/marketv ... /index.htm

He's done another one since but this one contains the most sage advice: very dangerous market, no way to know how high, a 5% overnight drop can come at any time. He has his old rankings down at the bottom of the page - number one in all time categories until he stepped off the bull train at some point in 2013. Probably moves back into that number one slot at some point. Sort of fits in with my comment of being 25% short and about all we can try to predict with any success is the next few hours. Seems like he said he was 20% short and no more than that for now.

[aedens]

https://institutional.vanguard.com/iam/ ... eturns.pdf

Input and considerations only.

[Higgenbotham]

SMART DUMB CONFIDENCE UNMARKED.png (32.38 KiB) Viewed 3967 times

Same chart as above with color coded lines added at the various extremes.

SMART DUMB CONFIDENCE.png (69.05 KiB) Viewed 3967 times

[vincecate]

I have a new post explaining why we will get inflation:

http://howfiatdies.blogspot.com/2014/01 ... oming.html

[Higgenbotham]

https://institutional.vanguard.com/iam/ ... eturns.pdf

Input and considerations only.

In 2004 I did a study of demographics and equity returns. It predicted that if the market behaved as it had in the past demographic cycle that the peak in stock prices would be in 2006 and the trough will be in 2022. The flaw in the study is that it assumes peaks and troughs are due solely to demographics and that the demographic effect is due solely to the peak and trough birth years. If there were some way to determine how people accumulate or distribute stocks as a function of age the second flaw could be overcome.

So to do this, I followed the very simplistic process of matching the peaks and troughs in the number of births with the peaks and troughs in the stock market using various lag times and assumed that relationship will carry forward. The census only has records from 1909 and from there the first birth peak was in 1919, the first birth trough was in 1935, the second birth peak was in 1959 and the second birth trough was in 1975 (all averaged). My assumption was therefore that the 1966 stock market peak would match 2006 and the 1982 stock market trough would match 2022.

My initial response to the Vanguard paper is that they are muddying the water. The amazing thing about the Vanguard paper is they don't even show a graph of the number of US births over time and compare it to the movement of the stock market.

There can be all kinds of goofy things that happen from 2006 to 2022 that have nothing to do with demographics but the bottom line is that the peak birth cohort from 1957-1961 should be selling more stocks than buying the closer it is to 2022 and beyond with no new cohort to pick up the slack until after 2022 when the Millenials will theoretically have the numbers and income to do so from their first peak births from 1990-1992. This would correspond to the initial surge in Baby Boomer births 40 years earlier which in theory helped lift the stock market off the 1982 trough.

[Higgenbotham]

If I understand what Vanguard is really trying to say in 7 pages, they are trying to say in a roundabout way that as people get older they won't sell their stocks. I would agree that in the years between now and 2022 there can be many reasons pro and con for shifts from past behavior. After spending a few days thinking about the pros and cons (which was many years ago), I came to the conclusion that it is best to assume that future behavior would approximately mimic past behavior. It's a very complex issue because, for example, there are a lot of government employees who can go out at 55 nowadays and their pensions might be paid by stock sales, etc. Pension funds might shift assets as their pool of retirees gets closer to drawing out their funds. Income patterns might shift to benefit older workers. Social security will be delayed and workers may have to work longer to compensate and feel more comfortable hanging onto their stocks. There doesn't seem to be a way to guess how all these factors will average out. The only thing I feel I know for sure after thinking about all this is that dead people don't own any stocks and everyone who was born during the baby boom will be dead sooner or later and will therefore sell stocks sooner or later, or their heirs likely will. Reminds me of a story. I went to a coin shop and asked if they had any Krugerrands for sale. He said he did, that someone died and left 300 Krugerrands to a few dozen heirs. He said nearly all of them came in to sell them and that he had almost all of them now. If some Baby Boomers love stocks until death do them part, chances are their heirs will not.

[aedens]

I was thinking the life cycle funds was just a expansion of the sheep pens and the reclassification of risk pools as another finger print on hedonic models as the base is wasting from repressionary policy of simple intent to decimate the paradox of thrift as trust was just shattered, which it simply was to force weak hands into the "managerial class" withthe Ergodic theory as quantitative actuarial science should not be denied with assumption of such a condition underlies statistical methods. The escalated debt fueled leverages will cancel out hedonic econometric model since the independent variables are related to quality; e.g. the quality of a product only. I do not buy that view at all for now as do you H. From what some view the process to extract to a sectoral rent seeking mugging suffices as a market will show it hand soon enough so I noted neck line and energy margin basket until I see how many chose food over mandated choices of central planners.

The only winning move is not to play. I will stick to what I see. That is for now accurate and wake me when the ES has a pulse and the swamp has a clue and ethics worth a damn.
I will watch the expires and futures then decide what and who is worth simple look outside baseline.

Everyone at the hospital, which is funded by the federal government, got less pay. Nobody knows why. It just happened.
http://www.themoscowtimes.com/news/arti ... 91549.html

Locally 130 never seen it coming either and the modeling we already noted to whit. Only two conclusions exist.

[Higgenbotham]

In the forums I'm reading things like, paraphrasing, I am 75 years old and have nowhere to go for income except the stock market; I like to play golf every day. That seems like a very dangerous game (not the golf but we do remember Gerald Ford). The elements of what you are saying are clearly there. Going further, I see the market behaving technically in ways that I've never seen before, not even during the move up to the 2000 high, or the later moves in 2010 in 2011 that were under the influence of QE, but in those cases a QE that was known to have an endpoint. In the move down to the 2009 low it did extreme things that I'd not seen the market do on the way down to a low, which I believed were a counter reaction to the extremes that were employed to take it to the 2007 high. If that's the case, you know what I think will happen next, as the extremes employed at this time are so much greater than they were in 2007. It seems to me that common sense things that work in stable systems, like the fact that 75 year old retirees who like to play golf should be able to put money in bonds and have a comfortable retirement, don't apply and won't apply. But that won't mean that come 2 months from now that retiree might need to panic out of the stock market and really truly then have nowhere to go.

[Higgenbotham]

Speaking of the extremes at the highs and lows, I had mentioned the mirroring effect a few weeks back that was seen between the major lows and highs. The 2008 and 2009 lows are separated by 105 days between November 21, 2008 and March 6, 2009. 105 days from the high at September 19, 2013 is January 2, 2014. This relationship has worked from time to time; for example from the November 5, 2010 high to the February 18, 2011 high was 105 days, and from the January 19, 2010 high to the test of the April 26, 2010 high which occurred on May 3 was 104 days. The late Terry Laundry had also found this effect and called it the ringing cycle. The distance between the lows at the bear market bottom seems to set up a resonance that takes effect throughout the move back to the next top.