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Higgenbotham wrote:

John wrote:** 14-Feb-2020 World View: Stock market trend

Higgenbotham wrote:
> I would estimate fair value on the S&P at no more than 1300
> (probably less).

I think that this analysis is exactly right.

I just updated my DJIA historical page for the first time in a while:

** DJIA Historical Page
** http://www.generationaldynamics.com/pg/ ... i.djia.htm

It says that the current DJIA trend value is 9325. If we assume
roughly ten to one ratio, then the current S&P 500 trend value would
be more like 932.

Thank you, I have been looking for that update. I think your 932 is a lot closer to actual trend value than 1300. If so, a 90% loss in the stock market over the next few years has a reasonable probability of occurring. For those who don't follow the stock market, the S&P is currently at 3380 and hit a new record high again this week.

I think we are being too analytical and rational. Markets are driven by sentiment, consider that at different times of the market a stock can have a price at a PE of 5 and then at PE of 30. Assume there is no change in the value of the underlying asset or earnings?. Then if the price was 100 at the PE of 5 it would become 600 at PE 30. So markets are mainly driven by sentiment. And goodness only knows how long that will take or what will cause it to change. Expect panic of the unexpected

** 15-Feb-2020 World View: Irrational markets

richard5za wrote: > I think we are being too analytical and rational. Markets are
> driven by sentiment, consider that at different times of the
> market a stock can have a price at a PE of 5 and then at PE of
> 30.

In the short run, markets are random.

But as time goes on, the following observation applies:

If something can't go on forever, then it won't.

John wrote:** 15-Feb-2020 World View: Irrational markets

richard5za wrote: > I think we are being too analytical and rational. Markets are
> driven by sentiment, consider that at different times of the
> market a stock can have a price at a PE of 5 and then at PE of
> 30.

In the short run, markets are random.

But as time goes on, the following observation applies:

If something can't go on forever, then it won't.

Totally agree John, but sometimes it feels like its nearly gone on forever. The maths is clear: The New York stock market is in the biggest bubble since the advent of accurate records in 1870. In fact even our better understanding of how to deal with economic emergencies it could be more devastating than 1929

** 15-Feb-2020 World View: Irrational markets and solvency

richard5za wrote: > Totally agree John, but sometimes it feels like its nearly gone on
> forever. The maths is clear: The New York stock market is in the
> biggest bubble since the advent of accurate records in 1870. In
> fact even our better understanding of how to deal with economic
> emergencies it could be more devastating than 1929.

With regard to timing, another observation applies:

“The market can stay irrational longer than you can stay solvent.”

John Maynard Keynes made this observation, not based on some academic
analytical formula, but based on his personal investment disasters,
where he correctly predicted where the market was going in the long
run, but was completely wrong in the short run.

By the way, possibly the bravest and most amazing person in the world
with regard to these issues is Higgenbotham. For years, he's been
juggling going short with trying to stay solvent, and he'd be the
first to tell you that he's come close to losing everything, and fears
that he may do so again. And yet, he perseveres, and is possibly one
of the few people in the world to do so.

He's essentially trying to show that Keynes's maxim can be beaten, and
that he can stay solvent longer than the market can remain irrational.
It's amazing to watch. So he's the one to watch if you want to play
games in the market.

https://duckduckgo.com/?q=outlier+defin ... definition
https://www.youtube.com/watch?v=ODwZzMLv7zU

http://gdxforum.com/forum/search.php?ke ... sf=msgonly

Technocratic threats issued by career bureaucrats with an over-inflated sense of relevance... tylers

שָׁעוֹן
stuck

Russell offered a revealing glimpse into Frankfurt School’s mass social engineering efforts, in his 1951 book, The Impact of Science on Society:
The actual thread is - The alliance theory.
As it was put clearly before. A bent of mind contrary to the Book and the Letter.

A few see it. H is one also.
Deadly errors arise from obsolete assumptions.
Bureaucracy destroys initiative.
Amos is still correct.

Short? Selective would be understatement.

We can date that also.

richard5za wrote:

Higgenbotham wrote:

John wrote:** 14-Feb-2020 World View: Stock market trend

I think that this analysis is exactly right.

I just updated my DJIA historical page for the first time in a while:

** DJIA Historical Page
** http://www.generationaldynamics.com/pg/ ... i.djia.htm

It says that the current DJIA trend value is 9325. If we assume
roughly ten to one ratio, then the current S&P 500 trend value would
be more like 932.

Thank you, I have been looking for that update. I think your 932 is a lot closer to actual trend value than 1300. If so, a 90% loss in the stock market over the next few years has a reasonable probability of occurring. For those who don't follow the stock market, the S&P is currently at 3380 and hit a new record high again this week.

I think we are being too analytical and rational. Markets are driven by sentiment, consider that at different times of the market a stock can have a price at a PE of 5 and then at PE of 30. Assume there is no change in the value of the underlying asset or earnings?. Then if the price was 100 at the PE of 5 it would become 600 at PE 30. So markets are mainly driven by sentiment. And goodness only knows how long that will take or what will cause it to change. Expect panic of the unexpected.

I know somebody who lost all his money shorting the stock market. He lost over a million dollars. The conversations we used to have went something like this:

Me: I'm short now.
Him: How high do you think it's going?
Me: I don't know how high.

That about sums up what is going on here.

What I would add regarding the stock market is you can be short, you can be long, or you can be in cash. Which would you rather be given the analysis above? The majority I hear who are cautious about these valuations and extreme sentiment numbers say they would rather be in cash. I'd rather be short.

long and short and cash
arrogance will clean them out of two positions

John wrote:** 15-Feb-2020 World View: Irrational markets and solvency

By the way, possibly the bravest and most amazing person in the world
with regard to these issues is Higgenbotham. For years, he's been
juggling going short with trying to stay solvent, and he'd be the
first to tell you that he's come close to losing everything, and fears
that he may do so again. And yet, he perseveres, and is possibly one
of the few people in the world to do so.

"And yet, he perseveres, and is possibly one of the few people in the world to do so."

This is true. If I persevere, I will be one of the few people in the world to do so. I know this by experience. One anecdote: I called my broker's desk in 2006 after the silver market had a mini crash. The head of the desk and I got to talking and I asked him how many accounts they lost in the silver mini crash on that one desk, about a dozen? He thought for a few seconds and said no, we must have lost 50. I asked how many people sold at the top. He said you were the only one.

aeden wrote:long and short and cash
arrogance will clean them out of two positions

Caution will clean them out of their cash through inflation and default.

The incomplete answer I see is skill with a heavy dose of luck. Really, there is no absolute complete answer.

Higgenbotham wrote:I know somebody who lost all his money shorting the stock market. He lost over a million dollars.

This same person, who by the way was an outstanding highly skilled trader (but lost all his money in this irrational stock market bubble anyway), told me he was long a huge number of gold contracts at the low in 1999 and got bucked off right before it took off.