Sure seems like the Fed is pulling out all the stops to try to keep the stock market up. Like maybe they can tell it ready to crash.Higgenbotham wrote: Mon Jun 15, 2020 2:30 pm Fed will buy corporate bonds in addition to corporate bond ETFs.
Financial topics
Re: Financial topics
-
Higgenbotham
- Posts: 7990
- Joined: Wed Sep 24, 2008 11:28 pm
Re: Financial topics
If we were to do the computation based on this linear graph, the area above the regression line (maybe not a totally accurate line, but approximately right) since 1995 is roughly 20,000 point-years. Over the next 30 years, the index would need to average 650 points below the regression line to balance the areas out. That would probably mean the index would need to spend considerable time below 400 over the next 10 years. In other words, unlike the 1930s, it would need to fall 90% and stay down 90% for years, rather than falling 90% and then recovering.
If long term trend growth were to fall substantially below 3%, I think even that would be optimistic, especially if long term trend growth were to turn negative for even a few years.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Re: Financial topics
https://www.youtube.com/watch?v=JqJkSmqte78
https://www.youtube.com/watch?v=mxjdM-_w7N8
dnc will be so utterly defeated even they will get it
https://www.youtube.com/watch?v=mxjdM-_w7N8
dnc will be so utterly defeated even they will get it
Re: Financial topics
** 15-Jun-2020 World View: Law of Mean Reversion
value over a sufficiently long period of time should always be
the same. If you apply it to an exponentially growing value,
then you have to use the logarithm.
In 2007, a web site reader took one of the P/E ratio graphs that
I had posted, and added the colors purple and green:
The Law of Mean Reversion says that the green regions have to have the
same area as the purple regions. Since 2007, there have been ALL
purple regions and NO green regions. Therefore, the reversion will be
much more severe than in the 1930s.
If the value being tested is an exponential growth value, then areas
of the purple and green regions would have no meaning, since the areas
aren't comparable. So it's necessary to take the logarithm for the
areas to be comparable.
The Law of Mean Reversion refers to linear averages -- the averageHiggenbotham wrote: Mon Jun 15, 2020 3:37 pm > Would the areas need to be computed based on a log chart or a
> linear chart?
value over a sufficiently long period of time should always be
the same. If you apply it to an exponentially growing value,
then you have to use the logarithm.
In 2007, a web site reader took one of the P/E ratio graphs that
I had posted, and added the colors purple and green:
- S&P 500 Price/Earnings Ratio (P/E1) 1871-2007
The Law of Mean Reversion says that the green regions have to have the
same area as the purple regions. Since 2007, there have been ALL
purple regions and NO green regions. Therefore, the reversion will be
much more severe than in the 1930s.
If the value being tested is an exponential growth value, then areas
of the purple and green regions would have no meaning, since the areas
aren't comparable. So it's necessary to take the logarithm for the
areas to be comparable.
-
Higgenbotham
- Posts: 7990
- Joined: Wed Sep 24, 2008 11:28 pm
Re: Financial topics
As long as the growth rate of the economy and profit margins are roughly constant (or exhibit somewhat predictable cyclicality) over time and there are still positive earnings, PE should give a good approximation.John wrote: Mon Jun 15, 2020 7:16 pm ** 15-Jun-2020 World View: Law of Mean Reversion
The Law of Mean Reversion refers to linear averages -- the averageHiggenbotham wrote: Mon Jun 15, 2020 3:37 pm > Would the areas need to be computed based on a log chart or a
> linear chart?
value over a sufficiently long period of time should always be
the same. If you apply it to an exponentially growing value,
then you have to use the logarithm.
In 2007, a web site reader took one of the P/E ratio graphs that
I had posted, and added the colors purple and green:
- S&P 500 Price/Earnings Ratio (P/E1) 1871-2007
The Law of Mean Reversion says that the green regions have to have the
same area as the purple regions. Since 2007, there have been ALL
purple regions and NO green regions. Therefore, the reversion will be
much more severe than in the 1930s.
If the value being tested is an exponential growth value, then areas
of the purple and green regions would have no meaning, since the areas
aren't comparable. So it's necessary to take the logarithm for the
areas to be comparable.
Since 1995 (25 minus 14 times 13 plus adding an estimate of 6 times 12 for the period between 2008 and 2020), the purple areas of the graph since 1995 appears to be about 200 PE-years, and if the mean reversion were to occur over the next 30 years, the PE would need to average about 6 over the next 30 years. That would probably imply PEs below 4 for several years during the next decade, and an S&P below about 400 for several years, as profits and profit margins are also likely to fall.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
-
Higgenbotham
- Posts: 7990
- Joined: Wed Sep 24, 2008 11:28 pm
Re: Financial topics
Do I think the above will happen without the economy collapsing into negative growth and the stock market going to zero?
Well, I don't because the Fed has pulled too much growth forward and the normal boom bust rhythm of the economy that allows growth to return and recovery to be possible (green shoots!) during a recession or depression has been broken.
But the mean reversion numbers show that a decades long depression is possible if that doesn't happen.
Also, I believe it may be overly generous to use 30 years for mean reversion if a normal 20 year crisis period is to be expected, but let's say the depression could drag on into the next high. I guess it's not impossible that mean reversion could occur over 20 years and PEs could dip as low as 2 while averaging 4.
Well, I don't because the Fed has pulled too much growth forward and the normal boom bust rhythm of the economy that allows growth to return and recovery to be possible (green shoots!) during a recession or depression has been broken.
But the mean reversion numbers show that a decades long depression is possible if that doesn't happen.
Also, I believe it may be overly generous to use 30 years for mean reversion if a normal 20 year crisis period is to be expected, but let's say the depression could drag on into the next high. I guess it's not impossible that mean reversion could occur over 20 years and PEs could dip as low as 2 while averaging 4.
Last edited by Higgenbotham on Mon Jun 15, 2020 10:59 pm, edited 1 time in total.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
-
Higgenbotham
- Posts: 7990
- Joined: Wed Sep 24, 2008 11:28 pm
Re: Financial topics
My thought was is this the best idea they can come up with? Really? I mean, these guys and gals must be geniuses. They know exactly what to do to save the economy and stock market. Buy junk bonds. Yeah, that's the ticket. How is that different than Davey Daytrader on Robinhood buying a bankrupt company like Hertz? I know, I know, the Fed will tell us it really is different, it's not printing money, and it's being done to meet their mandate of full employment.vincecate wrote: Mon Jun 15, 2020 4:03 pmSure seems like the Fed is pulling out all the stops to try to keep the stock market up. Like maybe they can tell it ready to crash.Higgenbotham wrote: Mon Jun 15, 2020 2:30 pm Fed will buy corporate bonds in addition to corporate bond ETFs.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Re: Financial topics
https://www.annualreviews.org/doi/10.11 ... 191.001025
...vacancy chains appear to organize a variety of social processes in nearly identical ways.
This chapter provides a broad and relatively nonmathematical review of the vacancy chain literature
covering basic definitions...
Turn off the power and lights. The current appropriation cults are asking for
General Sherman to show up so as General grant locked on to the remaining belligerents
as they piss and moan about media soaking reality longer into the election.
This is calibrated theft. We already covered identity politics and
the current intersectionality pronouned cult. This is the tone and optics phase of the socialist
suicide cults. Yea some parts are corrupted in agency's that attacked the Office also
and these are results cascading down. Borders did, and do matter.
The BISH people have elected dead heads and this is what happens when they piss on the oath of Offices.
Eye, hand, or foot. Decide.
http://gdxforum.com/forum/search.php?ke ... sf=msgonly
Futurist view: in notes
Idealist view: in notes
Pericopic view: in notes
https://www.youtube.com/watch?v=JIFksZhRZDU
https://www.youtube.com/watch?v=PkGwI7nGehA
Sun Jan 19, 2014 8:14 am
His name was Kelly Thomas.
http://gdxforum.com/forum/search.php?ke ... sf=msgonly
https://en.wikipedia.org/wiki/List_of_c ... _per_adult
And they still cannot accept the fact it was a planned event.
Internecine Slaughter, not civil war
“I have two great enemies, the Southern Army in front of me, and the financial institutions in the rear.
Of the two, the one in my rear is my greatest foe.”
One month after the inauguration of President Abraham Lincoln, the American Civil War got underway .
The real reason for the war is that . . .
Northern industrialists had used trade tariffs to prevent the Southern States from buying cheaper European goods. Europe subsequently retaliated by stopping cotton imports from the South. Thus the South were being forced to pay more for goods whilst having their income slashed.
This is when the money changers saw the opportunity to divide and conquer America by plunging it into Civil War.
This is confirmed by Otto Von Bismarck when he was Chancellor of Germany
(1871 - 1890), who stated,
"The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe, these bankers were afraid that the United States if they remained as one block and as one nation, would attain economic and financial independence which would upset their financial domination over the world.
One might ask the question, "Aren't American socialists in favor of their own country's survival?"
To answer this question, we must turn to abnormal psychology.
As the teacher conveyed irony at best.
Since Dunoyer incorporated Sismondi's theory into the Sayardian conception of political economy in which men have to adapt
their behaviour to the nature of things, or suffer the consequences.
...vacancy chains appear to organize a variety of social processes in nearly identical ways.
This chapter provides a broad and relatively nonmathematical review of the vacancy chain literature
covering basic definitions...
Turn off the power and lights. The current appropriation cults are asking for
General Sherman to show up so as General grant locked on to the remaining belligerents
as they piss and moan about media soaking reality longer into the election.
This is calibrated theft. We already covered identity politics and
the current intersectionality pronouned cult. This is the tone and optics phase of the socialist
suicide cults. Yea some parts are corrupted in agency's that attacked the Office also
and these are results cascading down. Borders did, and do matter.
The BISH people have elected dead heads and this is what happens when they piss on the oath of Offices.
Eye, hand, or foot. Decide.
http://gdxforum.com/forum/search.php?ke ... sf=msgonly
Futurist view: in notes
Idealist view: in notes
Pericopic view: in notes
https://www.youtube.com/watch?v=JIFksZhRZDU
https://www.youtube.com/watch?v=PkGwI7nGehA
Sun Jan 19, 2014 8:14 am
His name was Kelly Thomas.
http://gdxforum.com/forum/search.php?ke ... sf=msgonly
https://en.wikipedia.org/wiki/List_of_c ... _per_adult
And they still cannot accept the fact it was a planned event.
Internecine Slaughter, not civil war
“I have two great enemies, the Southern Army in front of me, and the financial institutions in the rear.
Of the two, the one in my rear is my greatest foe.”
One month after the inauguration of President Abraham Lincoln, the American Civil War got underway .
The real reason for the war is that . . .
Northern industrialists had used trade tariffs to prevent the Southern States from buying cheaper European goods. Europe subsequently retaliated by stopping cotton imports from the South. Thus the South were being forced to pay more for goods whilst having their income slashed.
This is when the money changers saw the opportunity to divide and conquer America by plunging it into Civil War.
This is confirmed by Otto Von Bismarck when he was Chancellor of Germany
(1871 - 1890), who stated,
"The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe, these bankers were afraid that the United States if they remained as one block and as one nation, would attain economic and financial independence which would upset their financial domination over the world.
One might ask the question, "Aren't American socialists in favor of their own country's survival?"
To answer this question, we must turn to abnormal psychology.
As the teacher conveyed irony at best.
Since Dunoyer incorporated Sismondi's theory into the Sayardian conception of political economy in which men have to adapt
their behaviour to the nature of things, or suffer the consequences.
Who is online
Users browsing this forum: Bing [Bot], Google [Bot] and 2 guests