In hindsight, I'm especially pleased that the cartoon physics model originally predicted a peak of 11,000 back in February. Who knew?
February 8, 2010
Stimulus was applied. Stocks rose into the air. Many seem convinced that stocks will keep going up. Who knows?
Please don't read too much into this. Almost anything can happen in a world filled with cartoon stimulus and/or cartoon physics.
March 25, 2010
May 14, 2010
May 24, 2010
June 24, 2010
June 25, 2010
The DJIA is trading at roughly the same level that it was trading at when I turned bearish in 2004. That was my primary fear in 2004. It would simply stagnate. That's my primary fear now.
My long-term prediction is therefore just about as simplistic as simplistic could be. Hello stagnation. It's just a gut call. I don't have much supporting evidence to back it up. Just add one part deflation to one part stagflation and that's what you get though.
August 22, 2010
Lookin' good! Sigh.
This is considered to be Greenspan's Age of Turbulence. Anything can happen next. He should know. He helped get us here!
August 1, 2010
Asia Day Ahead: Greenspan Says Decline in Home Prices May Spur Recession
Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi- recession” and the economy might contract again if home prices decline.
Really? A drop in home prices can cause the economy to contract? Who would have guessed? Perhaps I'll remain deflationary for a while longer then.
See Also:
Trend Line Disclaimer
Source Data:
Yahoo: Historical Prices for Dow Jones Industrial Average
Stag,
ReplyDeleteGreensham is an dingbat. He was one of the chief architects of the new (e)CONomy.
And Greensham is still wrong with his recession warnings. We're in the early innings of a long depression. Deflation has and will continue to decimate Main St.
Thanks to Bernanke, Wall Street has been spared from the misery of their handiwork. The looting continues.
mab,
ReplyDeleteI hear you. I'm bracing for that next move down just like you are.
That said, Dow 10,000 seems like a good 2016 target. It would be nice to be able to reuse all those hats.
I'm just doing a trend line from roughly where I turned bearish in 2004 through today and extrapolating it out until 2016. The math is super simple on that one.
Shiller thinks it's a toss up between stocks and bonds over the next decade, so I've got that going for me too.
Your serious deflationary thinking has a pretty good chance too though. Siegel did just say bonds are a bubble and we KNOW how accurate he can be.
I think we might avoid a long-term Japanese style deflationary decline if we can get oil prices back into the stratosphere at some point (not right away though). Win win.
That said, Dow 10,000 seems like a good 2016 target.
ReplyDeleteIf I had to handicap it for the next 5 years, I'd give stagnation/low growth (nominal & real terms) an 80% likelihood, deflationary bust 10% likelihood, trend growth 5% likelihood and high inflation 5% likelihood. Beyond 5 years it's hard to say, but eventually something will have to give and we could see inflation.
The debts are real and so is the creditor friendly bias.
Main Street is screwed. The damage is done. You can't un-ring a bell.
mab,
ReplyDeleteIf the economy was a horse in a horse race, your handicap would suggest we set it out to pasture.
However, I'm more optimistic. Jeremy Siegel has shown me charts of its statistical performance. Although it has not won a race over the last decade, the cumulative effect of all the stimulants we've injected into it will surely kick in at some point. And just look at that jockey! Do you really think Bernanke will allow a "homestretch" slowdown? Again?
Sigh.
the cumulative effect of all the stimulants we've injected into it will surely kick in at some point.
ReplyDeleteWith so much bad debt in the system, I just don't see how we are going to borrow our way back to prosperity.
We've already spent our past and borrowed against our future. Somebody is going to have to lose here and now.
Who can say for sure?
mab,
ReplyDeleteI think that the horse could be extremely competitive after a few down legs and once we trim the fat.
New and Improved Horse
Too much to ask?
Too much to ask?
ReplyDeleteOf course not. All it takes is that unwavering "can do" American spirit that makes exploitation & looting so easy.
WIth the right propaganda, I'm sure the FIRE sector can squeeze the wealth out of yet another future generation.
Mark,
ReplyDeleteYour R^2 graphs are one of a kind!!!
Of all the sites, few made accurate predictions like you have.
Also, it's been a while since our last stimulus scam, most people already forgot about it!
remy,
ReplyDeleteOnce you believe that stimulus cannot generate prosperity, it becomes easier to embrace cartoon physics.
I am not a believer in using charts to predict the future in general though. I think it is best to start with a theory first.
I had seen this pattern before. It was just after our last stimulus efforts. When I turned bearish in 2004, I started watching Capital One Financial. Look at its chart from 2003 to 2009. Same slowly rolling over pattern.