Saturday, November 22, 2014

Parabolic Trend Failure(s) of the Day: Real Nonfinancial Noncorporate Business Net Worth per Capita

The following chart shows the 10-year moving average of real proprietors' equity in nonfinancial noncorporate business (net worth) per capita (June 2014 dollars).


Click to enlarge.

$28,000+ for every man, woman, and child in this country? Perhaps I'm too cynical, but there are only two things that I genuinely trust on this chart.

1. Epic parabolic trend failure Tweedledum (r² = 0.9991).
2. Epic parabolic trend failure Tweedledee (r² = 0.9991).

Tweedledum and Tweedledee (comics)

Tweedledum and Tweedledee officially have no superpowers, but their fat bodies enable them to bounce and roll as they please.

Have I mentioned lately that I don't trust nonfinancial corporate business equities much either? Perhaps that stems from working at a company that experienced a massive accounting scandal, all under the watchful eye of the SEC.

September 27, 2007
Report: Cendant’s Silverman Knew about Fraud

Silverman, currently chairman and CEO of Realogy, a privately held real estate holding company spun off from Cendant, first learned of troubles at CUC on March 6, 1998, when Scott Forbes, then Cendant’s accounting chief, told him that he had been asked earlier that day to “help [CUC] creatively justify” $165 million in accounting entries, according to The Post.

Isn't that special?

Cendant’s accounting fraud was the largest before Enron and WorldCom. When the fraud came to light, Cendant’s market cap plunged by $14 billion in one day.

What's $14 billion among friends?

SEC: The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation

The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.

I'd start with, "Can I trust your accounting?" Follow it up with, "Do you creatively justify any of it?" Since you might not get straight answers, I'd also suggest using hidden thermal imaging tools.

February 2011
Thermal imaging as a lie detection tool at airports.

We tested the accuracy of thermal imaging as a lie detection tool in airport screening. Fifty-one passengers in an international airport departure hall told the truth or lied about their forthcoming trip in an interview. Their skin temperature was recorded via a thermal imaging camera. Liars' skin temperature rose significantly during the interview, whereas truth tellers' skin temperature remained constant.

Hey, just trying to think outside the box! I bring it up because your competition is definitely using cameras. If you don't have cameras too, then you are already losing the battle. Seriously.

November 26, 2010
This Black Friday, Somebody’s Watching While You Shop

The satellites snap pictures of hundreds of shopping malls, and analysts painstakingly count the cars in the parking lots of each one, looking to pin down the fill rates of each parking lot.

And people wonder why the average day trader loses money?

An Introduction To Day Trading

News provides the majority of opportunities day traders capitalize on, so it is imperative to be the first to know when something big happens. The typical trading room contains access to the Dow Jones Newswire, televisions showing CNBC and other news agencies, as well as software that constantly analyzes various other news sources for important stories.

I have never had nor will I ever have any desire to become a day trader.

This post was a journey. One thing kept leading to another. I better stop here or I risk going off on an H.P. Lovecraft tangent.

“It was from the artists and poets that the pertinent answers came, and I know that panic would have broken loose had they been able to compare notes.” - H.P. Lovecraft

Oops. Too late. :)

Source Data:
St. Louis Fed: Custom Chart

4 comments:

Rebecca Zegstroo said...

I'm sure glad you're back with a flurry of charts. I was getting way to cheerful with just the broadcast news to get info from.

Rob Dawg said...

There's that "per capita" phrase again. And again; I'M NOT SHARING!

Using per capita measures implies all kinds of things about our economy that haven't existed for a long time.

Stagflationary Mark said...

Rebecca Zegstroo,

Hahaha!

Stagflationary Mark said...

Rob Dawg,

There's that "per capita" phrase again. And again; I'M NOT SHARING!

Get used to disappointment. ;)

Using per capita measures implies all kinds of things about our economy that haven't existed for a long time.

I picked up a prescription for my girlfriend last night. I didn't have to drive that far. I saw 5 nail salons (every strip mall seemed to have one). I'm fairly sure they care, to at least some degree, about population growth. Just saying.