Coping: With “Half the Equation” Thinking

So here we are and it is “Turnaround Tuesday.” 

Futures this morning were up 500+ and the dollar had pulled back and despite what may go on in the rest of the world, this completes a big I down, as explained above.

The problem is that a lot of people are only using half their brains when it comes to thinking about life in these times.  People act exactly like herds of animals because they don’t remember  the one great truth in human affairs that comes to us from physics:


Which is?  Force is equal to Mass times Acceleration.

Or, on the financial statements:

Assets minus Liabilities equals Owners Equity

When people forget the duality of the equal sign, they miss much of Life’s teachings.

Let me give you some examples because we have them all over the place this week.

A reader, for example, sent me an article that “Large amount of gold and silver found in reservoirs under volcanoes in New Zealand” that appears on PhysOrg.

Along with the link to the article was the reader wondering “How might this play into things?”

Simply?  It won’t.

Yes there is gold under them thar hills.  But it is in reservoirs “hundreds of meters deep” and even though it might look impressive (3-billion of gold, 3 billion of silver annually) there’s the other side of the equation.

Remember my slapping your knuckles for forgetting this before?  Any time you read a news event, there is an equal and opposite side to whatever.

In this one, it’s “Who is going to put in multiple mines and where is the energy going to come form to mine hundreds of meters under volcanoes, and in reservoirs full of water for ore at 20-parts per billion?

Not I said the little red hen.

That is economic suicide.  Not to mention environmental disaster waiting for a place to happen.

There are examples everywhere.  Take this reader contribution:

Went into the detention facility (office ) this morning and everyone was atwitter over the market. We are an investment firm so I suppose there is some need for that. The office boob tube was switched on and some knucklehead changes from FOX news to Doomburger. I yelled, Hey dipstick, you better not turn off Harris Faulkner when it’s time for her show. Then promptly at the bell the charts start nosediving. It was almost hysterical to watch what you would think were reasonably intelligent and educated people running around like their hair was on fire screaming, what are we going to do, what are we going to do?

Sit back and enjoy the laughs.

Just remember two things.

The first is that there is never a major down move in the market without a rally at some point.  All that remains to be revealed is whether you will still be solvent when that point arrives.

The second thing is that (as I have been screaming at the top of my lungs here) until we break down through S&P 1,740, there is STILL a chance that this is an irregular high flat IV and we could get a V up any minute that would put in new all time highs for the Dow, S&P, and so forth.

My buddy Robin Landry, who has been managing money in markets since the mid 1970’s and has seen it all, says it is not as grabby when it comes to headlines, but just playing the market as the wave counts develop is the only approach that makes sense (and money) in the long term.

“Anyone who says they know the future is either a liar or a fool,” is one of his favorite sayings.  And he is neither and I’ve learned from that.

Oh, sure, we got on the Doom Wagon in late 2,000 through 2003, then again before and during the housing bust, and so on.

But when we got correctly long the market in 2009, a fair number of Peoplenomics readers unsubscribed.

That is the really, really weird part of human behavior.

Robin’s work has been saying “Oh-oh” for about five months.  The Peoplenomics Trading Model went Negative right after the Fourth of July.

And yet people won’t listen to data.  They are completely run by biases they have built up to support their F/U’ed belief systems!

What I sit back and shake my head about is this imponderable:  What is it about people that they will turn off perfectly good market input because it doesn’t agree with their personal biases…and then they will go out and squander their savings for the same reason?

It just flat-ass amazes me.

At the end of the road, there is probably just about as much good news to life (you were born and got a nice ride out of it ) as there is bad news at the end of it (you are dead, the ride is over).  A great big equal sign.  To begin is to end, yada, yada.

While millions of physics gurus ponder the meaning of infinity, the matter of balance on both sides of the “equal sign” doesn’t get nearly the play it deserves.  And that’s whether it’s during down markets or up.

Which, in part, is why Peoplenomics tomorrow (that I spent most of Monday on) will be so interesting.

You see, suppose this is the first wave down of the Larger One Down and suppose all our long-term work is right and within the next five or six years the Dow really goes to 1,000?

What is the big equal sign that will appear?  Hint: The title of Peoplenomics tomorrow is:

Retirement Crash.”

Which is what separates the thinking websites from the me-toos:  The thinking websites (like this one) will observe the sky is falling, so here are six ways to keep the sky from hurting when it lands on you.  Other websites yell the sky is falling and they don’t offer any help.

That is why we living in a paid-for mobile home in the woods and have since 2003 when the major down of the market was just getting organized.  The damn Equal Sign problem.

Because in the long view of life, the effects of the market all time high (on an inflation-adjusted, spending power basis) has been clear for over a decade.

The curious mechanics of denial are such that people don’t catch catch things that move too quick for the eye to follow.  Neither can they catch things that are too slow to feel on a repetitive basis.

It’s only when you remind them “Was your situation and prospects better in 2000 than they are today?” that you’ll begin to get to the truth.

The number of people I’ve met who are seriously better off and more comfortable today than they were in 1999 is nearly zero.  Those few on the other side of “nearly” are mainly those that have exploited others to remain on top.

Downright frightening is that both corporate parties are blind to this reality and don’t look now, but Donald Trump is edging toward the White House as the Grand Economic Illusion begins to crumple.

As ever, we shall see how the data develops.

The Weird Dream  Follow-up

A thoughtful reader sent in this:

“Doesn’t quite meet the time frame that you mentioned for your dream, but the Clean Energy Summit 8.0 was held in Las Vegas on Monday, 8/24/15, with Obama giving the keynote address. In looking at the agenda, doesn’t really appear there could have been in-depth discussions with the brief talks and breaks…location could meet the party atmosphere of the dream.

It would all fit, in an odd (that’s how dreams are) way:  The 2 PM would be the time difference between LV (Lost Wages) and Washington (Lost Mandate).  And the emphasis on gambling, yep.

As to the frustration that nothing other than hype is really happening?  I will let you judge over here

Write when you break-even…


6 thoughts on “Coping: With “Half the Equation” Thinking”

  1. “What is it about people that they will turn off perfectly good market input?” Because, it always ends in Either–Or. After the event “either or” gets to shine ;-).

    I Enjoy your writing. It’s among the best on the net. Btw., people over 85 do dream of laptops and installing WINX.

  2. win-x installation in the dream was a success with accompanying feelings. The dream followed after I’d read your installation story.
    Mine is yet to come, if there is still a future. Thank you!

  3. Just so you know, I didn’t unsubscribe because you went long in 09. I unsubscribed because I went poor. When the market crashed, my business went south, my wife’s health expenses went through the roof and … well the market crashed. I blew that part of it, not you. We still haven’t climbed out of the hole we fell into. We cut every expense we could to avoid BK. That much we accomplished. Something about honor in that thinking somewhere. Although, I now feel like a patsy for an economic system based on the slavery of debt.

Comments are closed.

Toggle Dark Mode