7 replies to this topic

[da_cheif]

http://www.safehaven...rticle-6728.htm

[eminimee]

To be honest...I saw the light only about 14 months ago....AND!!!!!!!!!! (save this post!)....you were one of two people that made me take a good look....so in that regard....I thank thee.

[VolPivots]

Stellar analysis

"Grains are in short supply and going to the moon as everybody likes to eat in this new global community."

[James Quillian]

But now banking and financial companies have developed ways to create money out of thin air by buying and selling, and repackaging these instruments over and over and over again.

This may be true but unless he describes the process it is just a statement. Broad money measures are definately increasing even as narrow measures are decreasing. He seems to be making a guess.

Stocks Set To Soar, With Air Pockets Along The Way.

Look for the same in 2007, the pullbacks will be violent or nonexistent depending on the market you are viewing, but there will be a deep pocket ready to take the positions off the small speculator as he gets killed during hard pullbacks.

Once an analyst starts seriously hedging a forecast, it becomes useless pretty quick.

How big is an air pocket?

The biggest risk will be political as politicians try to control something that is out of their grasp ala "Thailand" or Chinese ham handed attempts at controlling something they don't understand.

If something odd happens during an air pocket, then?

This article sound like satire by a closet gold nut.

James

Edited by James Quillian, 21 January 2007 - 10:58 AM.

[selecto]

Oh, yea.

[spielchekr]

Publicly-traded debt collectors candle charts were booming until a year ago. They could be saying that piling on the debt begets more debtworthiness in the new honor system credit economy. It's either that, or debt issuance is about to come to a screeching halt, reducing the supply of "good" bad debt.

Quote:

If certain people are "making payments on their mortgage and auto loans but not on their credit cards," explains Encore CEO J. Brandon Black, "they are much more creditworthy than a consumer who has had a home foreclosure." (source)

Hey, if it makes sense to him, it makes sense to me.

[Net]

Intuitively, it just doesn't make sense that the markets can continue to rise and rise exponentionally with no end in sight, but the article shows how it can happen. But then, if comparing the bull market from 1932 until 1966 (after which there was a 16 year running correction) then history is merely repeating, and there's still plenty of upside to go.

Devaluing the dollar reduces debt on a relative basis... i.e., think in terms of buying power remaining consistent, and to use what some might think is a rediculous example... What would happen to the current debt if the minimum wage in the USA (relative to that debt) increases to $1000.00 per hour, and the poverty line (relatively speaking) for a family of one is an income of $2.6 million per year? The cost of a basic home in middle America would cost $35 million, and $100 million in major markets... that's if buying power remains exactly the same as now. A loaf of bread would cost $370.00. Then, with a progressive income tax, devaluing the dollar and adjusting income for inflation progressively increases the tax burden (percent of income paid in taxes) unless there are "tax cuts" so to speak, because those who have income increases just to keep up with inflation also must bear the burden of being taxed in a higher bracket.

So, markets can indeed continue to rise due to inflation, even if the value in real terms (i.e., without currency devaluation) decreases (i.e., Prechter's silent crash theory). It puts a new perspective on thinking in terms of being IT or LT bearish on the markets.

Just last weekend, I looked at the market with a different, long term perspective. After looking at the last 107 years of data (the way described below), it helped me see the effect of both, increased market value combined with a devalued dollar (inflation) and makes me think twice about being long term bearish, particuarly with the perspective of this article, should his scenario come to pass. At least, it is a new perspective for me. For those interested in seeing the same thing, here's what I looked at:

I used Prophet.net's Java charts to see this perspective, so for those who are not famaliar wtih this site, or do not have 107 years of data with their own charting programs, I'll provide instructions to see this with Prophet.net.

Here's the link to Java Charts:

http://www.prophet.net/analyze/javacharts....mbol=$INDU

For the time frame, select "All" and you will have data beginning from 1900. Click on "Detach" (lower left column, see "Options") and you can expand the chart to full screen. Also under Options, find the check box for Log Scale, as you'll be comparing log and standard scales in different time frames. As a refresher, standard view is a chart using actual prices on a grid, whereby a log chart shows percentage change on a grid.

Under tools, you have some options. Find the "unzoom" option, for this excercise.

In order to look at this chart in smaller time segments, click and drag your mouse over the desired period.


Click on 1925 and drag your mouse to the left, off the end of the chart, and you will zoom in on a monthly chart from 1900 - 1925. Now, uncheck the Log Scale option while looking at this time frame, to see the chart relative to a standard price scale.

Put the chart back in log scale, and unzoom, then re-zoom from 1925 - 1950, and repeat the excercise, comparing log scale vs. standard scale. This time frame will give an interesting perspective on the crash of 1929.

Next, move on to the time frame 1950 - 1975, then from 1975 - 2000, each time, going back to the log scale chart before unzooming.

Now, zoom in on 1900 - 1975. Notice the crash of 1929 in both log and standard perspective on a 75 year time frame.

Next, look at the time frame from from 1975 until current. When looking at this time frame, watch the relative size of the 1987 crash when changing views.

Now look at this comparison (log vs standard) using the time frames, 1900 - 1982, and from 1982 - 2007.

Finally, look at a chart of 1900 to mid 1929, just prior to the crash. Try to have the last candle or bar show the last high of 383.90, August 1929. You can watch the month and year relative to your curser on the top left corner of the chart, to help you zoom.

Go back to the 107 year chart, and identify the crashes of 1929, 1974, and 1987. Now, uncheck log scale to see the 107 year chart in standard view, and look again at the crashes for those 3 periods. As you can see, those crashes virtually disappear into the noise, and this is what I was thinking about with the debt of today relative to continued exponential devaluation of the dollar... not to mention how individuals will be taxed more due to drifting into higher tax brackets (without "tax cuts" so to speak) while relative income (true buying power) remains flat or decreases.

What this exercise makes me think, is that I'm seeing an exponential devaluation of the dollar starting sometime in the early 1980s in addition to the overall increase in market value, and this devaluation reduces relative debt and progressively raises taxes "without raising taxes..." for which with my simple way of thinking, makes me me wonder, why wouldn't any government with debt want to devalue their currencies?

But, we can also compare this bull market to one that occured after the 1932 bottom to put in perspective how much the market has really increased in value lately relative to other bull markets, and what could potentially happen if history repeats. (That said, one must also keep in mind the increase in value due to innovation and productivity increases, vs. inflation.)

A great bull market occured from 1932 until 1966, and zooming in on this time frame from the 32 low until the 66 high shows a similar look as from 1982 - 2007.

The 34 year run from 32 - 66 was the greater bull, with a low of 42.30 and a high of 1001.1, an increase of 2,366% in 34 years. From 1982 low until the 2007 high the percentage increase has been 1,638%.

Starting with a 1983 low of 769.98, the same percentage increase as the 32 - 66 bull would have the market trading today at about 18,200 or so.

FWIW, just trying to see the big picture here... Both, with the true increase in relative value from manufacturing efficiency, technology, and innovation, and what happens with inflation.... with the perspective that goverments may actually welcome inflation while saying it does not exist.

[Vector]

"deep pocket ready to take the positions off the small speculator as he gets killed during hard pullbacks"