Bubble players are fascinated with anomalies like GameStop and Bitcoin. (BTC $31,565 at click time.)
But eventually – as the notion of “bubblehood” seeps into the public mind – such deviations from what used to be normal regress to historical means.
There are, therefore, plenty of guideposts offering advice on how “reversion to the mean” can happen. We begin with one of our Peoplenomics charts that we share here from time-to-time.
The data set from 1929 offers the idea that we should see a total decline of 3% before a 1.5% rally. I’d love to see that going into the weekly close tomorrow.
We don’t offer advice, of course, though as the chart above hints, if this is the same kind of collapse as a 1929 event, then a 60% decline from the all-time highs would be possible in 55-trading days from the top. And the fireworks, though hinted at for Impeachment Week, there are many dandy possibilities suggested by history.
One of these might be noting that the total decline from the 1929 high to a good low (down more than 15%) came in what pencils to 25-trading days from now. After that, however, a violent rally followed.
October 4, 1929 the Dow closed at 325.17 to 352.69 on October 11, 1929. Someone with a road map could have bagged a gain in that period of 8.46%. Which might be magnified in present-day markets by using index funds, however that brings tremendous downside risk, as well.
In fact, over in the Peoplenomics Master Index somewhere is a discussion paper about how far down a market needs to go in order to “break” leveraged products. Not a matter of return on your money now, so much as it’s time to hedge bets to insure the return of your money.
Five Classes of Market Declines
If you don’t have your copy of Computational Economics, 1998, vol. 12, issue 2, 97-114 saved and opened, you have a problem. That paper by a trio of three geniuses (Youssefmir, Huberman, and Hogg) has been somewhat “disappeared” from the free Internet.
Believe it, or not, there are “roll ups” being made of wide sections of intellectual property. In order to monetize, of course. Because? (repeat after me) “Everything is a business model!”
In said cite, on page 17, are the results of a large-scale multi-agent model. The general case showed what we see as a “normal” rolling top market. Another showed how the formation became bifurcated, depending on the placement of news events. (For clarity of thought, we use “news” as analogous to “money” because the placement of money has a similar effect as news in our own scribblings.
OK, then there’s “news” (or in ours, “money”) coming too late. IoW after the market peak.
Too far and you get a semi-crash.
Here’s the Rub, Though
Measuring “money” is fairly easy. We will get the H.6 report after the market close today, for example.
What’s harder to measure, though technical indicators like On-Balance Volume are useful over long time-frames (3-6 months), and very short-term (intraday when day or swing trading), it’s hard to keep a running-tab on how crazy people are at any particular instant.
In my view, long time-frames and generalization seem to be surer guides to desired outcomes. Which is why the Peoplenomics data is based on our Aggregate Index work.
A couple of “poster-child” stocks illustrate why: GameStop continued to rise despite shorts getting killed. Boeing stock got hammered because of crappy earnings. And some of the FAANG stocks…well, a bit mixed there.
My point is, you can look at the entire market as an entity. Or, you can look at the current “hot darlings.”
Historical hotties have included (variously) Tulips, South Sea Trading Company, the Radio Trust, most of the tech stocks when the Internet Bubble burst, over-levered banks when the Housing Bubble burst, and here lately, we see stocks like GameStop and Tesla (to name two) that may have moments of reckoning ahead.
Same goes for Bitcoins – which are in the same category as “confederate money” and “greenbacks.” Again, though, we simply wait for panic. And, as Baron Rothschild (was it?) said: “Buy when the blood is running in the streets.”
We now have more crypto’s (nutech) than we had automakers (nutech) in the Twenties. Getting a feel for this bubble stuff?
Good News About Panic
Panic is opportunity time. The trick is not to have been in the bubble-makers too long. Like overstaying your welcome, kind of thing.
Thus, while the YHH paper is genius with four workouts (normal), news or money early [which we saw in 2020], news or money late (rising possibility), or news/money much too late leading to Crash.
We figure by President’s Day, we may have a good handle on whether the Fed and the newbies in the White House have enough street smarts to cope and hold at the 20% down level. Imagine a Dow around 24,500.
If they don’t – and Wednesday’s Peoplenomics on an average 20.4 year cycle argues the possibility – then markets 40% of present prices rolls into view, massive real estate and job losses and…hate to write this…A Second Depression.
Think of a world where the Dow is halved. The S&P drops into the mid 1,800’s, or worse, the 1,500’s. Tech? Dead and dying. Because in that kind of workout, people become afraid. They sit on their wallets. Ad budgets dry up. And how does Tech work then, with no one to underwrite the monetization of Consumer data?
Almost unthinkable stuff. So I will STFU for now. But this weekend on Peoplenomics the update of the fifth edition of “How to Live on $10,000 a year, or less” will likely continue. Since I first published it, the inflation-adjusted $10,000 from the first edition to the fifth now is nearly up to $15,000 – and that’s just since 2003.
Sobering reminder: Prices don’t go UP – the purchasing power of money goes DOWN as more and more DEBT is loaded into our ‘money’ – stealing from us all for a cabal of greedy Banksters and a complicit, if not treasonous, Congress.
Take of Skepticism Pill
Whenever I see a story like Gold Demand Shrinks In 2020 On Virus Fallout: Industry, I wonder: “Hmm…Is someone talking their book?” Or, is this a way to keep people from acquiring the “yeller dog” before more inflation hits?
Hard call, actually: Monetary inflation argues gold prices to the Moon. Market waveform says we may still have a deflationary bout and negative interest rates and a lot more market downside.
When markets collapse, traders sell everything, which is why gold doesn’t go up when big crashes are about…
Kinda like airline stocks. As American, Southwest post record annual losses as recovery remains elusive. Yet, fundamentally good companies…it’s the playing field that’s buggered. Sickened, too…
Enough of the big and potentially grim picture. Maybe it will all muddle-through OK.
Let’s move on to the Not Seasonally Adjusted Reality of new Unemployment Claims. As always, the Yellow Highlighted numbers matter. The S.A. numbers are for deluded people (politicians, media, and statisticians):
That was good for us…was it good for you? Must have been good for someone ‘cuz Dow futures were up
68 171 after.
How About GDP and International Trade?
From BEA: (Bureaucrats of Economic Analysis)
“Real gross domestic product (GDP) increased at an annual rate of 4.0 percent in the fourth quarter of 2020, reflecting both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. In the third quarter, real GDP increased 33.4 percent.
As always, the misdirection in the GDP is enabled by issuance of the report in dollarized form.
In other words, ceteris paribus (or cunctis aequalia if you prefer), the real Wealth of Nations is measured on goods and services. How many tractors made, how many cups of coffee and donuts were served. In a world of massive financial injections (here, bend over…) dollarized data dangerously deceives the deluded. (5D)
Back out growth of money and then you’d have a legit view. But, you knew this, of course?
“The international trade deficit was $82.5 billion in December, down $3.0 billion from $85.5 billion in November. Exports of goods for December were $133.4 billion, $5.9 billion more than November exports. Imports of goods for December were $215.9 billion, $2.9 billion more than November imports.”
The look-ahead was forecast by the Chinese president last week. They are making China the “world’s indispensable economy.” Meaning, too valuable to attack when they come for Taiwan.
Tomorrow: Employment Costs along with Personal Income and Are You Kidding Me?
CBS rolls with “Schumer vows to move forward with Trump impeachment trial.” Schumer is an idiot. He’s also an attorney. But, I repeat myself.
Re-Shearing the Sheep: Since they’re too freaking dumb to understand heat-islanding and figure that the flip side of “rising sea levels” is really erosion of land masses (rain), the political hack class can run any storyline they want. Example de jour cited as “Biden signs orders strengthening efforts to battle climate change.”
Kiss Off Portland, Seattle
Looks like the Left Coast commie uprising in Portland we’ve been yammering about for months is becoming clear to others.
Take Forbes this morning with “Death of a City: The Portland Story.” Along with commentary like Andy Ngo’s “How the Media and Politicians Aided Antifa Rioters in Portland | Opinion.”
Yep. We hold certain truths to be self-evident…
Even as 186-miles up CommieState-5 in Seattle, “Activists criticize proposed changes to Seattle Police’s use of force, crowd control policies.”
Gee…why would activists argue for neutering police and protecting property? Oh…cause they don’t have any and don’t want to be busted for being lawless assholes robbing from workers???
Science of Militaria
With NuWar raging on the net, the future is coming into focus if you know where to look. Our .mil affairs whiz, Warhammer, offers this:
“Some random Woo science stuff for your reading enjoyment. First up, space-time modification, unfortunately weaponized.
It kinda reminded me of the long rumored but academically ignored work of Russian physicist Eugene Podkletnov . . .
. . . and NASA’s subsequent quiet follow-on research on Podkletnov’s ideas:
In a nutshell, indications are that much research currently being done is intentionally shielded from the public eye.
And then there’s one of your passions, which may not be so be paradoxical after all . . .
“Photobiomodulation, the application of red or near-infrared laser light, has also shown promise in treating various brain disorders, as well as improving attention, memory and learning (BBA Clinical 6 113)”
The cited BBA Clinical article takes you to this link.”
Which reminds me: Yes, we are still using the Light Crown and direct 660/NIR 850 nm light and feeling great, thank you. I only use the Speed Crown (based on a green LED array on the right temple and a blue LED array on the left temple (such that both are over the trigeminal nerve pack) twice a week, or so. Literally, I can get “over-charged” (picture a manic high with no downside, sort of like the drug NZT in the TV show Limitless).
I’m still learning how to “light dose” and it’s virtually free and safe compared with things like Modafinil and side effects of light? Ever go into a dark room?
As Long as our Lab Coats Are On…
Latest update from Chris Tyreman whose son, you’ll remember, is doing the YouTube series “Step-by-Step Millionaire.”
You’ll remember Chris’ son, Judah, now has a net worth of $350,000 at age 16, so not like it can’t be done. So far, the video I found most interesting was “Five Secret’s to Increase Your Luck…”
We have now hit a level where YouTube is now recommending our videos.
We received about 1000 recommendations from them that netted 45 views. Considering how many other things are on the page, that is a GREAT click rate.
If you feature the video I sent yesterday and a decent amount of people click on it from your readers, it should crank our recommended views by YouTube way up.
So far, even with the limited response, we seem to be slowly working up their charts at a much faster rate then normal. A lady who saw Judah’s stuff sent him a letter with a complete optimizing schedule to him, which helped us match what their algorithm is looking for.
I will send you the analytics on Monday so you can see the effect your viewers have.”
Chris sent along a picture from the latest video (which is here and is very good, as usual).
Shows what happens when a gallon of hot water is thrown into the air at -51F. A warm day in Canada this time of year….
OK, writing and starting to wire up the new rack of solar panels on the agenda today…
Write when you get rich,