Financial topics

[aedens]

Our third dot is closer than I expected.

[John]

I look at this issue of stock market volatility and retracement a
little differently.

During the period 2006-2008, I frequently wrote about the fact that
the S&P 500 P/E ratio was remaining relatively constant at around 18.
Then there was surge in 2008, and then a retreat back to the constant
level, until it became parabolic in 2009. So it remained constant for
most of four years.

During those years, I never thought it was an accident that it stayed
constant. I speculated that computerized trading programs were all
using the same algorithms, namely "sell when the p/e ratio goes above
18, buy when it goes lower." Thus, the value 18 became a sort of
self-fulfilling prophecy.



We are now completing two years of a different kind of constant
performance, based on my DJIA historical page.

http://www.generationaldynamics.com/cgi ... 010.i.djia

You'll see that the Dow was at about 11600 at the beginning
of 2011. Today it's above 13000, so it appears that the Dow
has grown 12% in the last two years.

But now take a look at the "(% of Trend)" column, which compares the
Dow to the historical long-term exponential growth trend, and you'll
that this value has remained almost constant for two years,
in the 190% to 200% range.

That is, on 1/1/11 the Dow was at 190% of the trend value 6148. But
today, the Dow is at 196% of the trend value 6726.

Once again, I don't believe that this is a coincidence. Once again,
I speculate that the computerized trading programs are using
algorithms that are following a Dow growth rate of 4.5% per year.
I don't know how those programmers came up with an expected growth
rate of 4.5% -- perhaps it's just a coincidence that it equals
the historical growth rate of the Dow. But those algorithms say
"Sell if stocks go above 4.5% growth, buy if lower." Thus,
the 4.5% growth rate becomes a self-fulfilling prophecy.

So, until some unexpected event occurs, a trading strategy that
would have worked well in the past two years and may continue
to do so for a while is to assume that the Dow will always
retrace to the 190% to 200% of trend range.

However, I'm not giving investment advice, and I would remind anyone
who invests in today's market to be aware of the "Principle of Maximum
Ruin," which is definitely alive and well. That is, when all is said
and done, the maximum number of people will be ruined to the maximum
extent possible.

[Higgenbotham]

Buried in one of my earlier posts, I wrote, "Prices convince by definition."

The educational system teaches people to provide explanations for data based on empirical evidence. The longer that evidence is tested and holds to scrutiny, the more firm is the belief that it is correct. Once such a belief is accepted, any data that deviates is considered to be an "outlier" and tossed out. Or in the case of Thursday's mini-crash in the S&P, in Wall Street parlance, it is a "buying opportunity". On Wall Street, with the advent of physicists and mathematicians occupying the street, the inappropiate application of scientific principles that work in the physical world to prices are being made under the erroneous assumption that price is similar to an observable and true measure of a physical system.

Going further, there is no standard body of scientific inquiry that studies what might occur on the edges to indicate that a phase shift from observable long term data is in the early stages of occurring. Scientific phenomena don't generally encounter that problem, though I saw a recent post here that discusses exactly that. Physicists and mathematicians who work on Wall Street are familiar with many physical constants that are invariate, such as the acceleration of gravity, the speed of light, etc. Statisticians who work on Wall Street are trained to look at data series and separate trend from noise and to focus their attention on trend, which is considered to be real, versus noise being random garbage to be ignored.

The problem with all of this is it keeps circling back to the same thing - that there's going to be a quick, massive and unexpected wipeout in the stock indexes and that there's no standard body of scientific inquiry that can deal with such a thing. We're on the edges here with talk of long term cycle inversions and maximum ruin. Since the trend that would buttress stock prices has been up since about 1490 or any date anyone cares to pick thereafter, it will take a lot of movement in the other direction to convince the herd that anything has changed.

For those who are unaware, the Thursday evening futures mini-crash that a and I have referenced ended with a move of about 30 points in 1 minute, from a value of about 1420 to about 1390.

[Higgenbotham]

Let's say in round numbers the large corporations and the government are operating at an overall loss of $200 billion per month, and $350 billion per month is being looted from the productive small businesses and from the pool of accumulated savings; the net rate of inflow to the center is still $150 billion per month. If the center then ratchets up to a higher rate of loss, the looting must increase to match that and that's where I think difficulty will be encountered. That's one reason I posted that Gallup small business survey; those folks are reaching the breaking point.

The Fed may be unable to continue stripping capital through the inflation tax. As mentioned, watch the silver price and the ratio of the gold price to the silver price. The ratio has quickly risen 4 notches. I talked about that ratio last year when commodity inflation peaked. If the productive small businesses begin to go under, then the only option left is to strip the capital directly from the savers through taxation, confiscation, or default.

http://goldprice.org/gold-silver-ratio.html
http://futures.tradingcharts.com/chart/ ... 1356293748

[aedens]

http://www.bankers-anonymous.com/blog/s ... -loophole/
“social silences”

[Higgenbotham]

As long as we're discussing subsidies and loopholes for the financial industry, let's not fail to mention the Rostenkowski 60/40 rule, which has probably done more to suck money into the financial centers at the expense of the periphery than anything I can think of, and it also never gets discussed.

[aedens]

https://www.mises.org/humanaction/chap35sec1.asp
There are only two explanations open. Either these self-styled welfare economists are themselves not aware of the logical inadmissibility of their reasoning; or they have chosen this mode of arguing purposely in order to find shelter for their fallacies behind a work which is intended beforehand to disarm all opponents. In each case their own acts condemn them. lvm

Bureaucracy destroys initiative. Herbert

http://www.youtube.com/watch?v=apBTMq8lb7M repost

[Higgenbotham]

A google search only gives 6600 hits for Rostenkowski 60/40.

[aedens]

Redirects and they bubble you away from anything relavent. Noted was pipeline page redirects.
You will not see that page is the point of the matter.

http://www.treasury.gov/offices/tax-pol ... rnbk09.pdf
Same thing we posted on the gold acounts a few days back many missed for 4 billion. The government will meet its obligations by handing out brand-new printed dollars, with declining purchasing power, and the old folks will have to depend on what support they can beg from their tax-ridden children. Men live by production, but the State lives by appropriation. While the haves and the have-nots struggle over the division of existing wealth, it is the business of the State to improve itself at the expense of both; it picks up the marbles while the boys are fighting. That has been the story of men in organized society since the beginning.

If you stoled 10 shillings in Adam Smith day you where hanged unless you where "above the commoners class"

As they noted a deliberate shift in investor attitudes towards how best to diversify the asset mix with an eye towards generating risk-adjusted
returns has been underway. What people have failed to garner is that FDR was the culmination of a sovereign to commercial statutes. From the second your naked person arrives on the planet you are titled. The flaw in the logic is when entitled as public lays a claim to the private capital base. Attitudes may change but the realism never does. This is the event of a structured implosion.This should sound familiar from the preceding paragraph.
First year compliance costs for companies covered by the Conflict Minerals Rules are estimated by the SEC to be as high as $4 billion. In view of these costs and for other reasons, it is incumbent upon companies to be as efficient as possible when designing their response to the rules. To assist companies
with this process, this article discusses some of the initial steps a company should take to prepare for filing its first Form SD.

http://sibileau.com/martin/wp-content/u ... -20121.pdf

Inflation targeting for ngnp is alive and well since 10% baseline yoy inflation is first metric even before
energy margin return paltform and ROC since cartel segments going forward are the only ones allowed.

http://www.treasury.gov/initiatives/fso ... 202012.pdf

Stranded Costs Will Always Be Paid by Taxpayers Why, because Romney would not explain actual issues of structual reforms and the
current GOP thinks we must pay for miscreants who cannot cross there legs. He knew that if he was to win it was based on what many disregard
today. I give him a hat tip on that.

[aedens]

Some time back we gave the Police the digital tape to get our property back countless times from our place of business
stating no prosecution and they may not do business with us until thay come in and explain. Police liked that, but the poor District Attourney
did not since the criminal justice system was losing business. They slapped us with a twenty five thousand dollar a year assessment but
we filed correctly on shedules and articles of incorporation and as conveyed before here we left analog a few years early
and opened a ISP. Some years later they are now paying eight thousand dollars tax payer money for business to come back locally.
I do not think so since you cannot be trusted then, or now with your script. I make money not even showing up.

In the brain dead zone over there, Depardieu was not amused. In an open letter, he renounced his French citizenship, broadsided the Prime Minister and the President, and shocked the nation: all taxes combined ate up 85% of his income.
Not true, explained eyewear mega-retailer Alain Afflelou during the interview. “Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”
Then he uttered “trench warfare” to describe the battle between the two sides. “We have to stop saying that CEOs are thieves, thugs, and dishonest people. We need people who work, who make a living, who create jobs.”
He was echoing Laurence Parisot, President of the MEDEF, France’s largest employer union. “Doubt is taking over the life force of the country,” she complained; Hollande in his confrontation with Depardieu was doing “the opposite of what he promised,” namely to pacify the country and reduce antagonism. “We are in the process of creating a climate of civil war, similar to 1789,” she said.

They are to stupid to understand what they are even doing. Over here it is social silence since they know how to loop all issues.
We are already gone. Work for nothing with dozens of parasites killing us. No accident.