Bold financial Visionaries Look To Models Rather Than The Herd
Beloved Friends and Relatives,
Looking back at the last 50-75 years is inadequate--looking back over the long term--at least 250 years (Seven Generations) is critical--but the information is limited. Today's news is probably not what is ultimately moving the market or the economy.
The public mood and long term cycles, or waves, of credit, debt, inflation and deflation is highly relevant along with historical patterns and cycles. Patterns tend to repeat over time. Maybe one day we will learn to balance this with human psychology to avoid these patterns.
On his website Neener explains how he tried to convince highly educated economists that it was less relevant to future price whether IBM reported good or bad earnings than were we were in the cycle. Many theories and methodologies will be tested over the next 10 years as it appears that many cycles, waves and patterns are peaking or exhausted.
If Neener and Prechter are right we are in for some very difficult times. The problem with forecasting is that these are long patterns, some taking decades to come to fruition, and our orientation is very short term. Our elders were clear that any of our decisions should look seven generations into the future. Are we still doing and promoting this approach?
Warm Love and Greetings,
Brother Phil
Bold financial seers look to models rather than the herd
By Spencer Jakab
http://www.ft.com/cms/s/0/9660d020-b7a2-11df-8ef6-00144feabdc0.html
Published: September 3 2010 22:59 | Last updated: September 3 2010 22:59
Baseball legend and inadvertent philosopher “Yogi” Berra quipped that “it’s tough to make predictions, especially about the future”.
That has not discouraged Wall Street’s modern day fortune-tellers who reap billions of dollars yearly for advice that has, by definition, a collective value of exactly zero. Earning one’s fair share of these spoils is not so much about being right as not being very wrong. Or, if one is wrong, having plenty of company. Sticking to the herd, extrapolating the recent past and discounting extreme predictions are human nature after all.
But history is full of extremes. Stocks have lost nearly half of their value twice in the past decade alone and at least once a generation before, yet a suggestion that the same thing is about to happen again places one on Wall Street’s lunatic fringe. Ironically, it was a lecture about cyclical patterns of admissions to insane asylums that sparked the financial career of Dr Charles Nenner, who is making just such a prediction.
Irreverent and iconoclastic, Dr Nenner has nonetheless gained admirers on Wall Street, having spent a decade advising Goldman Sachs on technical analysis and more recently selling his research to hedge funds. His views are based on a mathematical model contained in tens of thousands of lines of code that tracks not only financial cycles but also phenomena such as war and peace. He predicts a major military conflict between 2012-2015.
“These wars you have now – Iraq, Afghanistan – are minor conflicts. They don’t even show up,” he says. The why, how and where do not much concern Dr Nenner, who ignores news headlines to avoid bias. His model simply tells him so. “My medical background teaches me I can work with facts without understanding them.”
Dr Nenner made some prescient public calls about the housing bubble in 2006, the Dow’s 2007 peak, the recent bear market and the recent surge in grains prices, sparking media coverage of his grim outlook.
But he is positively Panglossian compared to Robert Prechter, the leading interpreter of the Elliott Wave principle and pioneer of “socionomics”, which tracks cycles of social mood. Mr Prechter attained guru status in the 1970s and 1980s by predicting the bull market and later warning his clients to dump stocks just before the 1987 crash.
Although he has tens of thousands of newsletter subscribers and numerous best-selling books, Mr Prechter’s painfully premature bearishness has hurt his popularity. Undaunted, he now predicts that the Dow will fall to 1,000 – a drop that would exceed the Great Depression’s epic collapse. He gives a socionomic explanation for public scepticism.
Both men see deflation as the underlying cause of a major bear market. In this they have company, but the notion that historical waves only decipherable by their esoteric formulas can predict the future has plenty of critics, earning unflattering comparisons to pre-Copernican astronomy. Mr Prechter, for example, is only the most prominent of many followers of Ralph Elliott, who devised his theories eight decades ago, and many reach starkly different conclusions.
To be fair though, imprecision does not disprove anything. The Fibonacci sequences that underlie both models describe natural phenomena like plant growth that leave plenty of room for variation at the edges. Getting the general timing and direction of financial market moves right, if not index levels, still would trump the average market sage. Both men share a disdain for backward-looking financial punditry. “It’s hilarious to watch people all day explaining what happened on financial television,” says Mr Prechter. “At least we’re predicting them ahead of time.”
Critics might gripe that dire predictions are a ploy to grab the spotlight, but Wall Street’s finest are equally biased in underestimating booms and busts. A year removed from the economic precipice, they may be giving such outcomes unduly short shrift. As Yogi himself said, “the future ain’t what it used to be”.
Looking back at the last 50-75 years is inadequate--looking back over the long term--at least 250 years (Seven Generations) is critical--but the information is limited. Today's news is probably not what is ultimately moving the market or the economy.
The public mood and long term cycles, or waves, of credit, debt, inflation and deflation is highly relevant along with historical patterns and cycles. Patterns tend to repeat over time. Maybe one day we will learn to balance this with human psychology to avoid these patterns.
On his website Neener explains how he tried to convince highly educated economists that it was less relevant to future price whether IBM reported good or bad earnings than were we were in the cycle. Many theories and methodologies will be tested over the next 10 years as it appears that many cycles, waves and patterns are peaking or exhausted.
If Neener and Prechter are right we are in for some very difficult times. The problem with forecasting is that these are long patterns, some taking decades to come to fruition, and our orientation is very short term. Our elders were clear that any of our decisions should look seven generations into the future. Are we still doing and promoting this approach?
Warm Love and Greetings,
Brother Phil
Bold financial seers look to models rather than the herd
By Spencer Jakab
http://www.ft.com/cms/s/0/9660d020-b7a2-11df-8ef6-00144feabdc0.html
Published: September 3 2010 22:59 | Last updated: September 3 2010 22:59
Baseball legend and inadvertent philosopher “Yogi” Berra quipped that “it’s tough to make predictions, especially about the future”.
That has not discouraged Wall Street’s modern day fortune-tellers who reap billions of dollars yearly for advice that has, by definition, a collective value of exactly zero. Earning one’s fair share of these spoils is not so much about being right as not being very wrong. Or, if one is wrong, having plenty of company. Sticking to the herd, extrapolating the recent past and discounting extreme predictions are human nature after all.
But history is full of extremes. Stocks have lost nearly half of their value twice in the past decade alone and at least once a generation before, yet a suggestion that the same thing is about to happen again places one on Wall Street’s lunatic fringe. Ironically, it was a lecture about cyclical patterns of admissions to insane asylums that sparked the financial career of Dr Charles Nenner, who is making just such a prediction.
Irreverent and iconoclastic, Dr Nenner has nonetheless gained admirers on Wall Street, having spent a decade advising Goldman Sachs on technical analysis and more recently selling his research to hedge funds. His views are based on a mathematical model contained in tens of thousands of lines of code that tracks not only financial cycles but also phenomena such as war and peace. He predicts a major military conflict between 2012-2015.
“These wars you have now – Iraq, Afghanistan – are minor conflicts. They don’t even show up,” he says. The why, how and where do not much concern Dr Nenner, who ignores news headlines to avoid bias. His model simply tells him so. “My medical background teaches me I can work with facts without understanding them.”
Dr Nenner made some prescient public calls about the housing bubble in 2006, the Dow’s 2007 peak, the recent bear market and the recent surge in grains prices, sparking media coverage of his grim outlook.
But he is positively Panglossian compared to Robert Prechter, the leading interpreter of the Elliott Wave principle and pioneer of “socionomics”, which tracks cycles of social mood. Mr Prechter attained guru status in the 1970s and 1980s by predicting the bull market and later warning his clients to dump stocks just before the 1987 crash.
Although he has tens of thousands of newsletter subscribers and numerous best-selling books, Mr Prechter’s painfully premature bearishness has hurt his popularity. Undaunted, he now predicts that the Dow will fall to 1,000 – a drop that would exceed the Great Depression’s epic collapse. He gives a socionomic explanation for public scepticism.
Both men see deflation as the underlying cause of a major bear market. In this they have company, but the notion that historical waves only decipherable by their esoteric formulas can predict the future has plenty of critics, earning unflattering comparisons to pre-Copernican astronomy. Mr Prechter, for example, is only the most prominent of many followers of Ralph Elliott, who devised his theories eight decades ago, and many reach starkly different conclusions.
To be fair though, imprecision does not disprove anything. The Fibonacci sequences that underlie both models describe natural phenomena like plant growth that leave plenty of room for variation at the edges. Getting the general timing and direction of financial market moves right, if not index levels, still would trump the average market sage. Both men share a disdain for backward-looking financial punditry. “It’s hilarious to watch people all day explaining what happened on financial television,” says Mr Prechter. “At least we’re predicting them ahead of time.”
Critics might gripe that dire predictions are a ploy to grab the spotlight, but Wall Street’s finest are equally biased in underestimating booms and busts. A year removed from the economic precipice, they may be giving such outcomes unduly short shrift. As Yogi himself said, “the future ain’t what it used to be”.
Views: 18
Comment
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Comment by Lonny Peddycord on September 7, 2010 at 12:00pm
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the puff and pop financial model has been the way the worlds bankers have kept people in all countrys tied into debt slavery with the carrot of credit money like a carrot in front of the mules. these bankers who are only out to dangle this incentive out in front of the people will force them to put the only real assets they have, in most cases real estate holdings and mortages which tie people into the yokes of debt and puff the money/credit bubble outward with a release of stimulus into the economy, puff puff puff till they then pop it by cinching down the flow of money into the system with a recession or crash to then come and take control of the hard assets. after a few years of collecting these assetts they will once again start the cycle over again by reselling these assets and make new consumers/debt slaves to prop up our economy.
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Comment by Carmen Funcia on September 6, 2010 at 11:18am
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IN MEXICO, THE TWO TV MAIN STATIONS STARTED A PROGRAM CALLED INICIATIVA MEXICO (MEXICO INICIATIVE) MORE THAN 46,000 INICIATIVES WERE REGISTERED AND IT IS AMAZING THE WORK SINGLE INDIVIDUALS HAVE STARTED AND TURN INTO GREAT ADVANCES, BUSINESS AND HEALTH CARE FOR PEOPLE WITHOUT RESOURCES. IF YOU SEE HOW THIS PEOPLE HAVE MADE NOT ONLY FOR MEXICO BUT FOR THE WHOLE MOTHER EARTH, YOU WOULD CRY OF JOY. LOVE CARMEN FUNCIA
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Comment by Stephen Bamford on September 6, 2010 at 7:06am
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Thanks for sharing.
This is good information to be aware of. One thing about the markets is they are completely unpredictable and subject to change out of the blue.
Whether markets or life cyclical or spiral, in the spirit of Yogi Berra, it happens...
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Comment by Lionel Little Eagle on September 5, 2010 at 10:27pm
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"It an't over, til its over"
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Comment by Grover N on September 5, 2010 at 6:51pm
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Wado
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'they did not come to trade nor seek fairness in trade to begin with nor resonate in the words of peace but this being so there is so much for our future generations and as it is so we have always looked forward be it with strengthened hearts knowing our ways are not theirs but to preserve we must educate and those who listen to the ways of our future together are they who most find the solutions. Elvina
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