WTF do people expect here?
I got an email from a reader (in the Comments section) who is very, very upset with what he takes as a lack of precision in terms of forecasting the minute of popping of the mega-bubble we’re now in.
Specifically, he doesn’t like the idea that when the year began, Ure’s truly announced a half-dozen, or so, potential “topping zones” and believe me, I understand the frustration.
But since this reader is also a Peoplenomics.com subscriber, I’m going to share some profound financial forecasting perspective with him – and you as well.
The first thing to remember is that spotting markets (often a year, or longer, in advance) is a lot like sasquatch sightings. You know the sasquatch was seen in the movie footage running left to right, but you’re not sure exactly how big it is because to do so requires there to be known items in his vicinity.
If we KNEW the height of a pine tree he’s standing by to be 7-feet tall – and he seems about that high – then we would judge his height accordingly.
But suppose it is a scrub pine. Three and a half feet tall – so maybe he’s that tall, instead.
Depth perception can be fooled by surrounding objects. Finance works in exactly this way.
Financial Markets and Golf
Another way to explain the “art of forecasting” is to look at it like you’re playing a round of golf.
When you tee-off (several years ago when the Wild Bull Market came into view) you estimate that it could go as high of 19,000 on the Dow, or it might scream all the way up to the 35,000 area.
Like different golfers, you’ve got different mega-bubbles to consider. 1921-1929 was the ball-crusher from the pin and we’re in mid-flight, about 75% of the way down the fairway in today’s game.
You would a forecast of a mega-bull based on how many, many rounds of previous “financial golf” have worked out in just this way. (Not many.)
Some of those rounds were horrible. Sliced on every hole, the score will be terrible. Other times, you couldn’t miss a shot if you tried. That’s how the market is played.
And if you’re looking for a very good short-term forecast, look at the statistical work in Peoplenomics last weekend. Because that will tell you the average number of S&P points gained -in how many days- before a Fed meeting. And count the trading days back and that’s when I will add to my long position. Statistically, we should be weak into next Tuesday, however.
But let’s get back to the Golf analogy because it is a hellavuh lot more fun than listening to the Fed Choir yammer about raising rates.
Today we here from Yellen, Evans, Lacker, Powell, and Fischer – all Fedtificating later on.
The Fed doesn’t play financial golf worth a crap. They believe higher rates will drop the market, but as we’ve explained, just the opposite happened when the discount rate was raised three times in 1928. Took a year, but….
Money washed out of bonds and into stocks. That’s where the ‘29 bubble came from. Raising the rates three times is what the present Fed seems likely to do and the hike on the 15th will be raise #2 if they do it – and there is an 80% chance they will.
January of this year I “teed off” on Coast to Coast AM with George Noory with my annual forecast. Yes: A March high was one of the projected highs. So was the end of July, and even further out. We could go to next year.
A market close next Friday, lower than today, would proclaim this to be the harmonic of 9//20/1928. Yes, that’s a long ways to run..a year before crashing. Make it 13-months.
The frustration expressed by our reader is that he wants to set-up for his second shot while the tee shot is still in the air.
NO! No! No!
I think the incredibly short-term low will come Tuesday, but there is so much wind out of Washington D.C. that this shot could land anywhere.
You have to wait for each shot to land…and that’s what the Peoplenomics Aggregate Index and the Peoplenomics Oscillator is all about. It’s where things land for the week so we can size up the next shot.
It is has not wavered since November 11th when it said, to those willing to follow it (and I don’t make any claims for its accuracy except to say it was built to make me money), “Get thee the hell long and stay long, this is one hellavuh tee shot!”
Now we come to the judgment part. We see how the tee shot is still sailing.
A statistical study (last Saturday’s Peoplenomics report) said (if you think about it) that we might want to buy a low next Tuesday and that the odds are good of a rally going into the Fed meeting announcement on the 15th. We should see something like a 20-point S&P rise.
But again…these are odds and we can never know about when a “gust of wind” or for that matter a “lightning storm, can blow-up the game while we are watching the tee shot.
Judging by the Oscillator this morning, the ball is going much further down the fairway. The Oscillator only matters on the Friday close, however.
Reader Robert, though, is just itching to be Right There precisely at the landing spot, all ready for the next shot when the tee shot lands. Chill, my friend.
If I said “OK, Robert, 231.22 yards down range, 14-feet, 5 1/2 inches west of the dead center of the fairway, and I will have the ball at your feet there in 17.03-seconds,” I’m sure he’d be happy.
”I’ll be ready…backswing cocked and ready to play! , I’m taking my practice swings right now!”
You would NEVER play golf that way.
Yet people want to (and do) play financial decisions that way.
Maybe it’s because the gallery is packed with paid promoters and shills who cheer “always being fully invested” – and why not? Most of them don’t make money unless you are all in…so it’s easy for them to promote “All in, All the Time…”
But we don’t recommend such an approach to golf OR investing. You always have three choices: Cash, long, or short.
A golf game – and investing – has a pace. Time to reflect, judgments to be made.
Seems to me the seasoned golfer (or investor) should take the tee shots, wait for the ball to land, then afterwards assess the factors that influenced its flight, while they mosey down the fairway to where the ball actually landed.
Hurry-up golf and hurry-up investing seem to lead to losing outcomes.
We know from watching how previous players have taken the next shot (adding to longs next Tuesday, for example) has paid off in the past.
But that STILL doesn’t modify the chance of rain, wind gusts, or (and this really happened to me once) having a ball land smack on the back of a large goose who was innocently swimming in a water hazard.
This morning Dow futures are nearly flat, so as we take to the course this morning, let’s talk about something else.
As we wait for this morning’s shot from the tee, we note that “Press coverage of Trump in his first month in office was 88% hostile, says a new study.”
The insurrectionists won’t take the day off, though. They’re trying to pin a Hillary-like email faux pax on vice president Pence. Might work, too, after all, unlike the Hillary press ownership, Pence doesn’t have a shadow government behind him on this one.
Why the insurrectionist shills are NOT touting the illegal alien gang members who were apparently involved in a “satanic murder” in Houston should be pretty obvious, though.
I would like to know how this happens and nothing is done about it: “Oregon judge is accused of helping illegal immigrant drunk driver ESCAPE from her courtroom while ICE agents waited outside to deport him to Mexico.”
Silly me, I thought judges were there to ENSURE that the law is applied evenly AND AS WRITTEN to all who appear. Old America, huh?
Hand me a sand wedge, would you? Yes, a ham and cheese sand wedge would be fine, if that’s all you have. Let’s carry more clubs and less beer next time. Seems to have clouded our thinking this morning. Let’s talk about social justice or some crap like that, shall we?