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EJ
02-12-09, 03:56 PM
http://www.itulip.com/images/panfire.jpgTimmy Geithner the debt serf: Out of the pan and into the FIRE Economy

Who better to run the US Treasury Department than a poster child for debt serfdom?
Little is known about Geithner's finances, other than tax problems (http://74.125.47.132/search?q=cache:UK3znB2v_kgJ:www.miamiherald.com/news/politics/AP/story/863936.html+geithner+mortgage+adjustable+rate+west chester&hl=en&ct=clnk&cd=3&gl=us)

The couple bought a home in the Washington suburb of Bethesda, Md., in 1992 for $275,000, taking a mortgage of $202,300. Through a series of refinancings and the sale of two properties, they climbed the economic ladder until they bought a house for $1.6 million in Larchmont, N.Y., in 2004.

All of the Geithners' mortgages - from big banks including Nationsbanc, which is now Bank of America; Chase Manhattan, which is now J.P. Morgan Chase; and Wells Fargo - carried adjustable-rate mortgages with the risk that annual rate increases could raise their interest payments to as much as 11.25 percent, though the couple tended to refinance or sell their homes before they faced a rate adjustment.

They also took out second mortgages, now known as home equity lines of credit, borrowing a total of nearly $1 million in 2002 on their second Bethesda home, which they bought a year earlier for $1,085,000.

In 2004, they sold that house for $1.45 million and bought their current house in the New York suburb of Larchmont with a $1 million Wells Fargo mortgage, later adding a $400,000 home equity line of credit, also from Wells Fargo.

(Hat tip to member BK)
Don’t know about you, but I want my Treasury Secretary to either own his house outright or if he is going to hold a mortgage at least show that he knows a lot more about household finance than Gary Coleman (http://www.youtube.com/watch?v=ns99tqLSDLU), by putting 20% down and taking out a 30 year fixed rate mortgage, to demonstrate that he is not financially illiterate. Taking out an ARM when mortgage rates are near historic lows and home prices are falling indicates he thinks either mortgage rates will remain low or decline from near 40 year lows over the course of the next 30 years, or housing prices will rise before his ARM adjusts so that he can refinance into a lower fixed or adjustable mortgage, or both. Anyone with half a clue about what is happening in the housing market knows that the likelihood of either happening is close to zero. Why can't he?

The latest government bailout plan revealed by Timmy on Tuesday did not go over well with stock market investors.


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<embed src="http://www.youtube.com/v/FwqA6hD7k5U&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="344" width="425"></object>
Tim Geithner in 30 seconds


Stock investors are still gagging on the details, which contains not a single politically inconvenient provision to address the source of the problem -- private sector debt that is inflating against collapsing real estate prices – yet promises further increases in public debt.
White House may move to buy bad mortgages (http://www.msnbc.msn.com/id/29146768/)

New proposal could break logjam of foreclosure relief efforts

The White House is considering a proposal to head off potentially millions more home foreclosures by using federal funds to buy up at-risk loans and then refinance them with more affordable terms.

“What they heard from all segments of the industry is nearly universal support for going in and purchasing these loans,” said [president of the National Community Reinvestment Coalition] John Taylor.
What's not to like if it's your assets receiving the government price protection? In 1930 is was gold, its price maintained by government fiat at $20.67 per ounce. In 2009 the asset receiving government price supports is real estate.

This plan might possibly be helpful, or at least not destructive, if by “refinance them with more affordable terms” they mean lower not only the interest rate of mortgages but – and this is key – also reduce the principle amount of loans, too, to reflect pre-bubble home values, which remain 40% over market prices based on ROI on rental income, as real estate consultants to iTulip tell us. That at least is a form of actual debt reduction, but we are not holding our breath, and neither are precious metals investors.

Even as stock investors pushed the DOW down to 1997 levels, precious metals investors were busy girding themselves for the long-term destination for global currencies with as world’s governments take the path of least resistance to avoid the politically impossible task of debt repudiation, a geopolitical game of Who Takes the Loss as Global Economies Crash?

Besides hoarding cash in US Treasury bonds for fear of further banking system collapse, investors are hedging their cash hoard from loss of purchasing power of the monetary units of debt. They are purchasing the Fourth Currency (http://www.fourthcurrency.com/) and its precious metal bretheren silver and platinum. The debt overhang continues to weigh on the global economy like a stuck anchor of a sinking ship in a rising tide. Before governments finally give in and cut the chain to let the debt anchor go, we remain on track to reach a Gold/DOW ratio we have been tracking since August 2001 (http://www.itulip.com/gold.htm), at approximately 2:1 by, more or less, 2015.


http://www.itulip.com/images/golddowratioforecast2008.gif


With gold rising 21% against the DJIA so far this year, we're still on track for a rendezvous with 2:1, with the DOW around 5000 and gold around $2,500. (See DOW/Gold forecast 2006 (http://www.youtube.com/watch?v=S_i7yWizHhg).) We did not expect a straight shot up from $270 when we decided to plunge into the gold market in 2001, and for certain we did not get one, nor do we expect a continuous rise to $2,500 from here. In fact, buying gold at these prices defies a simple principle we follow here at iTulip: buy cheap. The only truly cheap assets we see today are early stage technology deals. We are told that the pre-money on a typical follow-on round is now $0, meaning the money-in is the valuation. Ouch. But it takes far bigger brass ones to buy stock in a start-up company today than gold in 2001 at $270; gold is always going to be worth something, whereas stock in a start-up can go to zero in a heartbeat.

On the other hand, waiting for gold to get cheaper before buying has not worked since mid 2008. My forecast for a bottom in the last correction down to $780 in August 2008 (http://itulip.com/forums/showthread.php?p=45471#post45471) was exceeded by $40 (5%). Some believe it will fall below $700 still. That is looking more and more like the last "cheap" entry point in the current global economic crisis cycle. After being in and watching the gold market since 2001, the train of logic I follow is that if gold is over $900 with oil down below $40 and the global economy in full-out collapse, the only thing that is likely to bring it back down again is a rapid recovery. Recover is not what we are hearing from our contacts in Japan, China, the UK, Malaysia, Australia, Ireland, and Spain, to name a few conversations this week.

Here's the latest from the Japanese Ministry of Economy, Trade and Industry (METI):


http://www.itulip.com/images/japanindustryalproduction1998-2009.gif


To cut the debt deflation process short that is crushing the global economy, in my view, requires a global meeting of the minds among the world's leaders, both to arrange for debt foregiveness within domestic economies and to relieve the foreign debt burden on the world's major economies. As it is, they appear to be headed in the other direction (http://mpettis.com/2009/02/more-terrible-trade-numbers-from-china/). (Hat tip to member petertribo.) So, I remain long gold and short government.

News from Iceland

The latest from Iceland is a move to join the European currency union.
Iceland minister says adopting euro logical step (http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKLC82590920090212)

STOCKHOLM, Feb 12 (Reuters) - Iceland's new commerce minister said on Thursday the adoption of the euro was a more logical path towards restoring financial stability than currency cooperation with Norway.

Iceland's economy collapsed in October after its top commercial banks failed under the weight of foreign debts and trade in its currency effectively ceased.

In an interview with Reuters TV, Iceland's minister of business affairs, Gylfi Magnusson, noted that joining the EU was a controversial idea, particularly because of its fisheries policy which many Icelanders would not want to subscribe to.

"But if we want a credible currency with a credible central bank to back it up then the euro seems to be the most logical option," he said.
Why not? It's worked for Ireland... so far.
Barroso repeats Ireland- Iceland comparison (http://www.irishtimes.com/newspaper/world/2009/0212/1233867933072.html)

EUROPEAN COMMISSION president José Manuel Barroso has repeated his view that Ireland would be in the same position as Iceland if it were not a member of the euro zone.

“The situation in the euro area countries would be much worse and much more difficult if we didn’t have the euro. I always mention the case of Ireland, comparing it to Iceland, so this is indeed a great demonstration of the success of the euro area,” said Mr Barroso yesterday in comments to the media that are likely to anger Taoiseach Brian Cowen.
At least the Icelanders can go back to cod fishing. What shall Ireland do, or the UK generally, now the North Sea oil’s running out and the FIRE Economy has collapsed?

News from Iceland-on-Thames
Downturn worst for 100 years, says Ed Balls (http://business.timesonline.co.uk/tol/business/economics/article5699906.ece)

The economic downturn is so severe that it would surpass even the Great Depression of the 1930s, Ed Balls said yesterday.

In an extraordinary admission about the extent of the financial crisis, the Schools Secretary and a close ally of the Prime Minister, declared that the downturn was the most serious global recession for "over 100 years".

He said: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out."

He added: "I think this is a financial crisis more extreme and more serious than that of the 1930s."

(Hat tip to member petertribo)
Incredibly, all of the economic carnage is a consequence of Debt and Delusion as explained ten years ago by Dr. Peter Warburton in his book Debt And Delusion (http://www.amazon.com/gp/product/0713992727?ie=UTF8&tag=wwwitulipcom-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0713992727)http://www.assoc-amazon.com/e/ir?t=wwwitulipcom-20&l=as2&o=1&a=0713992727. Ten years later, evidence behind his claims are at last coming to light.
HBOS whistleblower: statement of evidence (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5702655.ece?token=null&offset=0&page=1)

Memorandum from Paul Moore, Ex-head of Group Regulatory Risk (GRR) at HBOS

Background and credentials

I was head of Group Regulatory Risk (GRR) at HBOS between 2002 and 2005. I reported to the chief financial officer (CFO), Mike Ellis. I had formal responsibility for the bank’s policy and oversight of executive management’s compliance with Financial Services Authority (FSA) regulation.

I believe that we are missing the wood for the trees and that the key solutions to prevent such an event happening again are simpler than we think. In relation to policy changes, I make some short recommendations that the Committee may wish to consider in section 4 below.

But let’s start with the cause and this fairly obvious proposition: even non-bankers with no “credit risk management” expertise, if asked (and I have asked a few myself), would have known that there must have been a very high risk if you lend money to people who have no jobs, no provable income and no assets.

If you lend that money to buy an asset which is worth the same or even less than the amount of the loan and secure that loan on the value of that asset purchased and, then, assume that asset will always to rise in value, you must be pretty much close to delusional? You simply don’t need to be an economic rocket scientist or mathematical financial risk management specialist to know this. You just need common sense. So why didn’t the experts know? Or did they but they carried on anyway because they were paid to do so or too frightened to speak up?
Turns out the geeks were paid to shut up (see Jocks and Geeks Theory of Financial System Dysfunction (http://itulip.com/forums/showthread.php?p=2596#post2596)) and a consequence of the securitized debt boom was a global white-collar crime wave.

Scarce resource in demand: a sense of humor

As this depressing Depression drags on, we are determined to keep our sense of humor. The following bit of gallows humor, courtesy of a UK based friend of one of our members, fits the bill.
A lobbyist on his way home from Parliament is stuck in traffic. Noticing a police officer, he winds down his window and asks: "What's the hold-up?"

The policeman replies: '"The Prime Minister is so depressed he's stopped his motorcade and is threatening to douse himself with petrol and set himself on fire. He says no one believes he can get us through the credit crunch. So we're taking up a collection for him."

The lobbyist asks: "How much have you got so far?"

The officer replies: "About 40 litres, but a lot of people are still siphoning."

(Hat tip to member GRG55)
iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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Chomsky
02-12-09, 05:03 PM
You're going to wear out the brim of your hat with all those tips!

energysustainability
02-12-09, 05:15 PM
If gold is going to $2,500 by 2015, why would now not be a good entry point? Obviously, not as good as 2001, but on an upward trend so a decent option for the longer term.

And short government? As in Treasuries?

aaron
02-12-09, 05:28 PM
I am glad Geithner is a "normal" American with debt, mortgages, and personal financial challenges/successes. I am tired of multi-millionaires running our country.

None of our politicians are responsible. None of them have done a good job.
At least Geithner can feel my pain and perhaps that will lead to a solution that helps me.

FRED
02-12-09, 05:31 PM
I am glad Geithner is a "normal" American with debt, mortgages, and personal financial challenges/successes. I am tired of multi-millionaires running our country.

None of our politicians are responsible. None of them have done a good job.
At least Geithner can feel my pain and perhaps that will lead to a solution that helps me.

That is a good point. Ideally the Treasury Secretary is not ultra-wealthy and out of touch, and also shows that he knows how to manage household finances prudently.

hugh_lawson
02-12-09, 05:35 PM
If gold is going to $2,500 by 2015, why would now not be a good entry point? Obviously, not as good as 2001, but on an upward trend so a decent option for the longer term.


The strong run-up in gold's price recently has me thinking it will take a breather soon before going back above $1000. I'm looking for it to drop back to around $820. If it does, I will buy more then.

I am basing this on Elliot Wave Theory which I have recently started following. It looks like gold is about to complete the fifth wave of an upward impulse, with a correction to follow.

I'd be interested to hear from some more experienced technical analysts on gold's current price.

jtabeb
02-12-09, 05:51 PM
also shows that he knows how to manage household finances prudently.

Humor, yes?

dtimwinn
02-12-09, 06:28 PM
Buy the actual gold (via bullion coins) or funds such as GLD and IAU?

mercerbear
02-12-09, 06:36 PM
That is a good point. Ideally the Treasury Secretary is not ultra-wealthy and out of touch, and also shows that he knows how to manage household finances prudently.

Haha, one out of two....But, then again, politics are supposed to be about compromise! Personally, I think I'd prefer a rich guy who hasn't made poor personal finance choices running the Department of Treasury!

Mega
02-12-09, 06:44 PM
I sense Gold is being "Held" At sub $1,000......suspect that there are people in the back ground wanting to use it for Brent woods 2. Thing is NO ONE in their right mind will invest in either Wall st or "the City".

The British were clever enough to finance the world, but without being the world reserve currancy. In Apirl we are going to face it...........from there on wards it down hill all the way!

What ever Gold does in $, i know its going MEGA in £!
Mike

Contemptuous
02-12-09, 06:47 PM
Geithner's home buying track record sounds every bit as speculative/flaky as all the rest of the people we don't feel much sympathy for. You know, the ones that used to get slightly hoarse telling you that you were missing the boat by not doubling down on your property holdings, back in 2004-2005. I can remember one or two that got so vehement you could see the vein in the side of their neck bulging slightly as they were talking at you on this theme, while you were haplessly buttonholed at some party.

To read this guy's household budget profile, apparently pulling every scrap of equity out of his properties at the most aggressive rate, to "leverage up" and "climb the socio-geographic ladder" leaves a slightly repugnant aftertaste. Don't like the guy already for the fact he's now in the position to fling my future tax revenue around to "paper over the problems" after having flung his equity around to further an overeager speculation of his own during the go-go years. I'd sooner see you leaving than arriving, Mr. "Eager-Geithner".

charliebrown
02-12-09, 06:56 PM
I'm late to the gold party too. I fear just backing up the truck at 930. I have 300 GLD at a cost of 74, own them free and clear. I have 300 more where I wrote a feb call at 99 (boy I hope it does not moon shot before 2/20), and I have 500 more where I sold calls for 81.00, so I'm going to get called out at the end of the month. I have 10 oz physical. I have limit orders to start buying at 850, if we ever see that again.

My thoughts are as follows.
Own some physical and some GLD. The GLD you can trade up and down to make some profit which can offset your cost of the physical. You can also use GLD as kind of a pre-buy for physical. For example I have a limit order at 85.00 for 100 shares of GLD. If this triggers, I can sit back and think about buying some physical. Maybe wait for further price weakness, or really beat the bushes for physical gold with a low mark up. Once I find the physical, I can sell the corresponding GLD.

I dont think it is likely the gvt will confiscate your gold. first of all they are not contrained in printing money by the amount of gold they have like they were on the gold standard. Secondly unless the price of gold goes to nose bleed territory in a hurry i dont think they are going to confiscate GLD.

However we live in interesting times. If the wheels do come off the bus all bets are off. That is why I think it is a good idea to have some physical. I dont know what the magical number is, 2K by the end of the year?? I'm hoping I can see it coming and that I will have time to move from GLD to physical, maybe I will get caught with my pants down who knows.

I looked over bullion vault that seems interesting. If I keep my gold in swizterland can the gvt get their hands on it? Will I be in trouble with the IRS. I know it does not generate any income, but I think i still have to report it. Can the gvt squeeze bullion vault or me to roll over?
They can most likely eliminate the ability for me to repatritate the money. So if disaster strikes, I live in the US and my money is in switzerland. Dont know if that is such a great deal either. I dont have enough gold to relocate, and i dont want to leave this great country either.

Ive been looking at the OECD data and some countries are really in trouble. A default by Russia could be the tipping point.

mercerbear
02-12-09, 06:59 PM
Don't like the guy already for the fact he's now in the position to fling my future tax revenue around to "paper over the problems" after having flung his equity around to further an overeager speculation of his own during the go-go years. I'd sooner see you leaving than arriving, Mr. "Eager-Geithner".

I second. Furthermore, what the hell was Obama thinking appointing this clown? I never "drank the Obama cool-aide" but I was cautiously optimistic that our new leader might bring some fresh perspective and good decision making to the White House. So far, not so much.

I have a feeling that we're about out of chances to try the right solution to the crisis but all we are getting is more of the same from policy makers. The political stranglehold FIRE interests enjoy in Washington seems so overwhelming that no progress can be made. I don't see a light at the end of the tunnel yet.

Contemptuous
02-12-09, 07:04 PM
You forgot to take your blue pill this morning MercerBear. Please remember to regularly take your medication, or we'll have to call Nurse Ratchet. You may become contagious to the other inmates.


I second. Furthermore, what the hell was Obama thinking appointing this clown? I never "drank the Obama cool-aide" but I was cautiously optimistic that our new leader might bring some fresh perspective and good decision making to the White House. So far, not so much.

I have a feeling that we're about out of chances to try the right solution to the crisis but all we are getting is more of the same from policy makers. The political stranglehold FIRE interests enjoy in Washington seems so overwhelming that no progress can be made. I don't see a light at the end of the tunnel yet.

charliebrown
02-12-09, 07:06 PM
Yes i want a politician to feel our pain, but on the other hand this guy is a moron. I sort of understand the first time home buyers, buying their first modest houses in the 2000's seeing them rapidly run out of sight, and stretching themselves to get in, but this guy is a high end speculator at the worst time. If one would just look at rent vs. own, or price to income it was very apparent this bubble was going to pop. I forgive J6P. I do not forgive mr. smarty-pants, college educated, financial guy.

mercerbear
02-12-09, 07:10 PM
You forgot to take your blue pill this morning MercerBear. Please remember to regularly take your medication, or we'll have to call Nurse Ratchet. You may become contagious to the other inmates.


Hahaha, nice one :D

Down Under
02-12-09, 07:14 PM
On the other hand, waiting for gold to get cheaper before buying has not worked since mid 2008. My forecast for a bottom in the last correction down to $780 in August 2008 (http://itulip.com/forums/showthread.php?p=45471#post45471) was exceeded by $40 (5%).

According to Kitco, on 24 October 2008, London AM Fix was 692.50, PM Fix was 712.50.

Master Shake
02-12-09, 07:26 PM
I am glad Geithner is a "normal" American with debt, mortgages, and personal financial challenges/successes. I am tired of multi-millionaires running our country.

None of our politicians are responsible. None of them have done a good job.
At least Geithner can feel my pain and perhaps that will lead to a solution that helps me.

What makes you think that Geithner is not one of the Eilte? He wouldn't be Treasury Secretary if he wasn't.

From Wikipedia:

Geithner was born in Brooklyn, New York (http://en.wikipedia.org/wiki/Brooklyn,_New_York), USA (http://en.wikipedia.org/wiki/USA).<SUP class=reference id=cite_ref-3>[4] (http://en.wikipedia.org/wiki/Timothy_F._Geithner#cite_note-3)</SUP> His father, Peter F. Geithner, is the director of the Asia program at the Ford Foundation (http://en.wikipedia.org/wiki/Ford_Foundation) in New York. During the early 1980s, Peter Geithner oversaw the Ford Foundation's microfinance (http://en.wikipedia.org/wiki/Microfinance) programs in Indonesia being developed by Ann Dunham-Soetoro (http://en.wikipedia.org/wiki/Ann_Dunham), mother of President Barack Obama, and they met in person at least once.<SUP class=reference id=cite_ref-4>[5] (http://en.wikipedia.org/wiki/Timothy_F._Geithner#cite_note-4)</SUP> Timothy Geithner's mother, Deborah Moore Geithner, is a pianist (http://en.wikipedia.org/wiki/Pianist) and piano teacher in Larchmont, New York (http://en.wikipedia.org/wiki/Larchmont,_New_York) where his parents currently reside. Geithner's maternal grandfather, Charles F. Moore, was an adviser to President Dwight D. Eisenhower (http://en.wikipedia.org/wiki/Dwight_D._Eisenhower) and served as a vice president of Ford Motor Company (http://en.wikipedia.org/wiki/Ford_Motor_Company).

Mega
02-12-09, 07:51 PM
What makes you think that Geithner is not one of the Eilte? He wouldn't be Treasury Secretary if he wasn't.

From Wikipedia:

Geithner was born in Brooklyn, New York (http://en.wikipedia.org/wiki/Brooklyn,_New_York), USA (http://en.wikipedia.org/wiki/USA).<SUP class=reference id=cite_ref-3>[4] (http://en.wikipedia.org/wiki/Timothy_F._Geithner#cite_note-3)</SUP> His father, Peter F. Geithner, is the director of the Asia program at the Ford Foundation (http://en.wikipedia.org/wiki/Ford_Foundation) in New York. During the early 1980s, Peter Geithner oversaw the Ford Foundation's microfinance (http://en.wikipedia.org/wiki/Microfinance) programs in Indonesia being developed by Ann Dunham-Soetoro (http://en.wikipedia.org/wiki/Ann_Dunham), mother of President Barack Obama, and they met in person at least once.<SUP class=reference id=cite_ref-4>[5] (http://en.wikipedia.org/wiki/Timothy_F._Geithner#cite_note-4)</SUP> Timothy Geithner's mother, Deborah Moore Geithner, is a pianist (http://en.wikipedia.org/wiki/Pianist) and piano teacher in Larchmont, New York (http://en.wikipedia.org/wiki/Larchmont,_New_York) where his parents currently reside. Geithner's maternal grandfather, Charles F. Moore, was an adviser to President Dwight D. Eisenhower (http://en.wikipedia.org/wiki/Dwight_D._Eisenhower) and served as a vice president of Ford Motor Company (http://en.wikipedia.org/wiki/Ford_Motor_Company).


Yes, nice notice how these fuckers all KNOW each other, and they love to help the likes of Indonesia:-
http://www.youtube.com/watch?v=yTbdnNgqfs8

This is how the American Empire operated, & now its almost DEAD!
Mike

drhilarius
02-12-09, 08:13 PM
No big surprise... Timmy believes that central bankers are gods who have vanquished inflation forever... so why wouldn't he get an ARM? He thinks that rates could never possibly rise with such geniuses at the monetary helm...

metalman
02-12-09, 08:44 PM
According to Kitco, on 24 October 2008, London AM Fix was 692.50, PM Fix was 712.50.

lowest spot on the tic? daily close? weekly average? monthly average? he doesn't say. question is... if you bought at $780 and gold fell to $700 before heading to $940 today, how'd you feel? better than if you waited for $700 and it fell to $500? better than the die hard deflationists who are still waiting for $650 to come around any day now?

no one ever calls a perfect bottom, except mega... but then we're not talking about gold in that case. :D

GRG55
02-12-09, 08:58 PM
That is a good point. Ideally the Treasury Secretary is not ultra-wealthy and out of touch, and also shows that he knows how to manage household finances prudently.

Seems to me that Geithner's mortgage situation should be just one more data point validating the iTulip thesis that the outcome of all this is going to be...inflation. Certainly Tim will do his part. It's in his interest to do so, non? :rolleyes:

FRED
02-12-09, 09:36 PM
Seems to me that Geithner's mortgage situation should be just one more data point validating the iTulip thesis that the outcome of all this is going to be...inflation. Certainly Tim will do his part. It's in his interest to do so, non? :rolleyes:

Or he could argue that some of his mortgage should be forgiven because it reflects asset price inflation that the Fed helped manufactured with 1% interest rates, non-enforcement of banking regulations, turning a blind eye to mortgage fraud, allowing a free-for-all in the CDS markets, endorsing fraudulent theories like Value at Risk, allowing securitization to be used with 100 to one leverage, goosing the market government loan guarantees via GSEs and tax subsidies, and on and on. "Debt foregiveness" is a big term these days. It means chasing all the little, bitty bits of morgage bonds down all over the plant.

Credit Risk Pollution: once the molecules are in the ocean, it's tought to get them all back out again.

Even if this were feasible, suggesting all of this is not a good career move for Timmy. Maybe inflation is a more probable outcome. :mad:

BK
02-12-09, 10:22 PM
Geithner doesn't feel your pain - he doesn't care a rats @$%@ about anyone except for himself/his family. He will use his office to improve his Political Career in order to pay off his Adjustable Rate Million Dollar Mortgage.


If the US is turned into a third world economy he won't care because he'll have a secure Federal Government Job- with a Pension and Healthcare and you'll be fighting for your economic survival -
WAKE UP!

petertribo
02-13-09, 07:42 AM
Congrats that you did some research and investigation into the finances of this important Appointee. This is what the Senate had the power to do but did not. Just like it has ignored everything else leading to this Depression.

And maybe soon, Timmie can get a CRAMDOWN, where a politically appointed Federal Judge or Magistrate Judge can force a highly favorable adjustment to his Mortgage. CRAMDOWNS will put your Senator, Congressperson, and other well connected Officials into the Federal Courts to wield their Influence Magic there in favor of those filling the political coffers. CRAM ME DOWN PLEASE!

Looks kinda fishy too that Senator Gregg accepted a nomination and then backed out. Tax, other problems might have been revealed if scrutinized. Maybe he saw a Daschle Moment. Scrutiny he will not now undergo by continuing as a Senator. Senator Gregg even done in by his own GOP?

The Mainstream Media does not even ask.

skidder
02-13-09, 08:21 AM
I'll note for the record that the Euro now has one more country in the fold, lending credence to the notion that this world wide economic takedown is going to result in a consolidation of world currencies (NWO theory).

we_are_toast
02-13-09, 09:35 AM
So, I remain long gold and short government.


I'm always impressed with the analysis done at iTulip, but there seems to be this idea that the government is somehow this homogeneous entity that you can anticipate will either do the right or wrong thing. The government is a whirlpool of conflicting opinions, with departments within departments taking actions in conflict within their parent departments, and all engaged in some Darwinian attempt to survive the extremes of the budget process and evolve into something that can stand the test of time.

The idea that you can invest in the government, either long or short, seems a bit peculiar. If investing in the stock market is playing in traffic, than investing in the government is like getting a job at the Olympics as a javelin catcher.

metalman
02-13-09, 09:48 AM
I'm always impressed with the analysis done at iTulip, but there seems to be this idea that the government is somehow this homogeneous entity that you can anticipate will either do the right or wrong thing. The government is a whirlpool of conflicting opinions, with departments within departments taking actions in conflict within their parent departments, and all engaged in some Darwinian attempt to survive the extremes of the budget process and evolve into something that can stand the test of time.

The idea that you can invest in the government, either long or short, seems a bit peculiar. If investing in the stock market is playing in traffic, than investing in the government is like getting a job at the Olympics as a javelin catcher.

you're missing the point, toast. 'long' gov't means it is...

- shrinking
- spending less
- crowding out private investment less
- employing fewer people
- not increasing public debt
- not subsidizing the fire econ at the expense of production

when those things are going in, you gotta be short gov't.

<table valign="top" align="left" border="0"><tbody><tr><td>http://www.itulip.com/images/ubra2.png</td> </tr> </tbody></table> (http://www.itulip.com/images/ubraflagexplained.jpg)Government and Service Jobs for All! (http://itulip.com/forums/showthread.php?p=42397#post42397)

The latest payroll employment numbers came out today and they are not pretty. Unemployment has picked up over the past seven months. As usual, before we dig deeper into the Labor Department's numbers to see where jobs were lost and gained, first we unfurl the United Banana Republic of America (UBRA) flag because, once again, the big winner in job growth is in government.

Chris Coles
02-13-09, 10:36 AM
I'll note for the record that the Euro now has one more country in the fold, lending credence to the notion that this world wide economic takedown is going to result in a consolidation of world currencies (NWO theory).

Having watched Germany build an impressive economy upon a strong Deutschmark and then hold it there for decades while Sterling dropped away, I find myself inclined to believe that the Euro will follow the same course and do everything it can to prevent devaluation. But that instinct is trammelled by the idea afloat here on iTulip that the way forward just might involve a sudden, no prior warning, devaluation of the $US, which in turn would automatically precipitate a similar drop for Sterling.

And, for that matter, is that why our Chancellor has announced that his next budget will not be before April 22nd?

So the parallel point to ponder is will the Euro follow everyone else down and if not why not?

santafe2
02-13-09, 01:45 PM
The strong run-up in gold's price recently has me thinking it will take a breather soon before going back above $1000. I'm looking for it to drop back to around $820. If it does, I will buy more then.

I am basing this on Elliot Wave Theory which I have recently started following. It looks like gold is about to complete the fifth wave of an upward impulse, with a correction to follow.

I'd be interested to hear from some more experienced technical analysts on gold's current price.

Here's some advice from a much better investor than I. Benjamin Graham offers the following: "The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices."

I've found this to be very solid advice. Before you buy gold decide if you are a speculator, (trader in today's terms), or an investor. Once you do that you'll clearly understand if you should start scaling into gold today or wait to time the market.

If you're approaching EWT from a mathmatical point-of-view, I'll be interested to know what you think of it a couple of years from now. You should also check out Gann Cycles and Fibonacci Numbers to ensure you get through these as quickly as possible. I'm not saying these are not enjoyable, like a crossword puzzle for word geeks, just that they may not be the straightest path to successful investing.

charliebrown
02-13-09, 03:09 PM
when my kid would not go to sleep last night, I had some time to reflect on what I wrote. OK, i was too harsh on timmie. even though he made some bad decisions he is a well connected insider and is treasury secretary. I am still J6P.

FRED
02-13-09, 03:32 PM
The strong run-up in gold's price recently has me thinking it will take a breather soon before going back above $1000. I'm looking for it to drop back to around $820. If it does, I will buy more then.

I am basing this on Elliot Wave Theory which I have recently started following. It looks like gold is about to complete the fifth wave of an upward impulse, with a correction to follow.

I'd be interested to hear from some more experienced technical analysts on gold's current price.

For the record, our policy is so strongly anti-technical analysis (TA) that we have spurned no fewer 50 attempts over the last two years by Elliot Wave and others to resell their products and services, despite a persistent and well organized marketing and sales effort, and by conservative estimates we forgone at least one hundred thousand dollars in revenue by sticking to this policy.

We are pro-investing and anti-gambling, that is, against trading except for the occasional foray into a short when it's particularly tempting, because it appears to us that the majority have it wrong. And then we call it what it is, speculation; we never call it investing.

We have the same attitude about trading based on TA as we have toward casino gambling and state lotteries. We are equal opportunity bashers of schemes designed to seperate people from their money based on marketing that selectively presents the product's or service's performance, usually by marketing to the classic gambling mentality which is deeply embedded in American culture, and many Asian cultures, too.

The gambling mind is anti-statistical, and we all have one. The gambler loses, loses, loses, wins, loses, loses, wins, loses, wins, loses, loses, loses, wins, and so on. But when the gambling mind thinks back on it, it remembers the series this way: win, win, win, win, lose, win, win -- that is, that the whole string of bets netted out to a win, when statistically that is not possible. Always the gambler discounts indirect costs, such as transaction fees, but especially their time.

It is easy to debunk technical analysis. All you have to do is collect a series of forecasts that were based on technical analysis and compare them to actual results. It's surprising how few people bother, but such is human nature and the dogged determination of the gambling mind to accept the fantasy that they can beat the odds.

We recommend instead of trading that readers buy Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (http://www.amazon.com/exec/obidos/redirect?link_code=as2&path=ASIN/0812975219&tag=wwwitulipcom-20&camp=1789&creative=9325)http://www.assoc-amazon.com/e/ir?t=wwwitulipcom-20&l=as2&o=1&a=0812975219 and read it.

We make about ten cents every time a member buys the book, by the way. Not as good as the hundreds of dollars we'd make selling trading junk, but that's the difference between what you can make on get rich quick schemes versus cold, hard reality. There's short money in the former, but we are betting :) that in the long run we'll do better by sticking to the latter.

Contemptuous
02-13-09, 05:09 PM
And there you have it Hugh, in a (very hard!) nutshell. Make that a Macadamia nut.

Meanwhile, over in technical analyst navel gazer's land - some useless "positional awareness" for prospective long term investors mulling plain old buys or sells (Clive Maund - English Tech Analyst - Diplomate of Int. Soc. Tech Analysts):

It don't hold a patch on iTulip, that's for darned sure. But useless? I'd say Mr. Maund was getting the bum's rush, being referred to as useless.

1088

1089

Spartacus
02-13-09, 06:10 PM
It's fine for Buffett to be a Graham type investor. He can afford private investigations and interviews with auditors and so on ..

You and I CANNOT.
You and I CANNOT see beyond the shoddy accounting that's available to us.

IMHO, it's IMPOSSIBLE for a regular person today to be a Graham type "investor".


Here's some advice from a much better investor than I. Benjamin Graham offers the following: "The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices."

And the only time TA is useful is
1. in hindsight
2. if enough people have been lured into using it that it affects the markets

in case 2., if you're using the same system as all the others who've bought into that system, you and all the other users of one system will buy at the same time & sell at the same time. It's unlikely the majority will make money (be able to get in before the artificial TA inspired price rise, get out before the TA inspired price drop, and taking slippage and transaction costs into account)

A lot of quants have been through a lot of strategies ... check out some of the stuff on Wilmott. Back when you and I could afford a 286 and excel, Wall Street had Cray X-MPs and Macsyma.

One of my classmates that got a PhD in Chemical Engineering, thesis on oil resevoir modeling (solving 5th order PDEs) went to Wall St and told me years later one of the first things he did was run TA systems through the paces with data sets that the public will never get.

Any that made money did it for a short time & then failed.

metalman
02-13-09, 06:19 PM
And the only time TA is useful is
1. in hindsight
2. if enough people have been lured into using it that it affects the markets

why don't people understand this?


in case 2., if you're using the same system as all the others who've bought into that system, you and all the other users of one system will buy at the same time & sell at the same time. It's unlikely the majority will make money (be able to get in before the artificial TA inspired price rise, get out before the TA inspired price drop, and taking slippage and transaction costs into account)

wonder if it is possible to catch that peak stupid among ta traders when they are all following the same bullshit idea... and trade against them?


A lot of quants have been through a lot of strategies ... check out some of the stuff on Wilmott. Back when you and I could afford a 286 and excel, Wall Street had Cray X-MPs and Macsyma.

oh yeh? why with my new/exclusive/etc. system from joe chartmonger i can beat 'em all... and his newsletter is a bargain at only $2000 a year!


One of my classmates that got a PhD in Chemical Engineering, thesis on oil resevoir modeling (solving 5th order PDEs) went to Wall St and told me years later one of the first things he did was run TA systems through the paces with data sets that the public will never get.

Any that made money did it for a short time & then failed.

of course. if a trading scheme works it gets arbitraged away in days if not hours.

Spartacus
02-13-09, 06:22 PM
Hey FRED ...

curious if your circle has been through this

https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/books-and-monographs/psychology-of-intelligence-analysis/index.html

He recommends that whatever position you normally champion, turn it off for a while and IN GOOD FAITH, do the opposite analysis.

Hmm... I've never added that to educational resources list ...


For the record, our policy is so strongly anti-technical analysis (TA) that we have spurned no fewer 50 attempts over the last two years by Elliot Wave and others to resell their products and services, despite a persistent and well organized marketing and sales effort, and by conservative estimates we forgone at least one hundred thousand dollars in revenue by sticking to this policy.

Spartacus
02-13-09, 06:35 PM
why don't people understand this?


The sales pitch
i. is SALES - plays to greed & other emotions. Side-steps reason for a lot of people
1. uses data-mined data sets
2. is SALES - plays to greed & other emotions
3. EXCLUDES transaction costs
4. EXCLUDES missed fills
5. OMITS reasonable tax assumptions (as one example, massive profits on one transaction don't get taxed and carried over for hundreds of future trades ... not realistic)

basically excludes everything that reduces profit and includes friendly data sets.

you'll see every couple of years, regular as clockwork, if one follows the TA sales pitches for long enough, someone will go through and evaluate a bunch of systems on actual profits and realize no system is profitable over the long haul with real assumptions. For years and years, every few years an article would come out running the numbers and showing the muni market funds consistently beat everything else because of the tax considerations, but no system, ABSOLUTELY NONE ever recommended munis.

metalman
02-13-09, 06:40 PM
The sales pitch
i. is SALES - plays to greed & other emotions. Side-steps reason for a lot of people
1. uses data-mined data sets
2. is SALES - plays to greed & other emotions
3. EXCLUDES transaction costs
4. EXCLUDES missed fills
5. OMITS reasonable tax assumptions (as one example, massive profits on one transaction don't get taxed and carried over for hundreds of future trades ... not realistic)

basically excludes everything that reduces profit and includes friendly data sets.

why don't even well educated people understand that? have a friend who is dogmatic about elliot wave. i ask, 'have you ever counted up all of your trades and figured out if, minus what you spend in the wave stuff, trading costs, taxes, etc, you are making money?'

his answer... 'i don't need to. i know i'm making money!'

Contemptuous
02-13-09, 07:11 PM
Dear Spartacus and Metalman -

One good exercise would be to avoid the stark bias of citing only examples of the dumbest 90% of this technically oriented interest in the markets. This technical approach to reading market action, in case it escaped you, is a rather large area, in which a very large number of people have brought varying degrees of talent over the past 100 years. We've been here before, haven't we?

Rather than display bravado knocking down straw men, why don't you take on "technicians" like WD Gann, who took 50 million dollars in winnings out of the markets using *a lot* of technical analysis? He devoted his entire life to technical analysis "navel gazing" and is one of perhaps the top 3-5 top market speculators of all time. You got the chops to convincingly debunk the results of his work? In a previous round of specious dismissals, when WD Gann's jaw dropping record was pointed out, objectors sort of shuffled off mumbling into their shirts.

Try putting up intelligent critiques of that far more intelligent remaining 10%. such as WD Gann, and argue convincingly that his vast winnings were produced entirely in spite of his lifelong fascination with technical factors. That would be a more interesting exercise on your part. If one reads debunks of "technical analysis" which frolic around describing what the stupidest third rate proponents do it does not do much more than reward your own comfortable preconceptions with a pat on the back.

You can take even iTulip's serious and hard probing macro-economics driven methodology and by rummaging around, find some exceptionally wooden and stupid proponents of this "methodology" too. Or is such a notion anathema to you? The point is, there is no such thing as a "methodology". There is most certainly no such thing as an easily delimited "mass herd of deluded pseudo-technical-analysts" although I see you apparently yearning to affix this caricature upon some donkey's rear end.

That homogenous whole does not exist. There are only large numbers of individuals, a decent number of whom are reasonably intelligent, upon whom you wish to pin this donkey's tail.

There is no such thing as a "tribe of deluded tecnical analysts" to debunk. That assertion is brazen, and I'm saying it's bunk - (for lack of any other dissenting voices here - everyone seems willing to get their porridge spoon fed on this topic). It is a large canard. There are only individual analysts, and they are of many, many subtly different stripes. A few of them, like WD Gann, are at the forefront of "technical analysis navel gazing" and they took more hard cash money out of the markets than this entire community combined likely will in the next three to five years.

50 Million dollars. iTulipers are going to clean up in the markets between now and 2014 to the tune of this sum? Wakey wakey?

The presumption of summarily lumping "all technical analysis" into one big ball of easy to skewer play-dough, to then be "witheringly debunked" in the sort of easy sport you are indulging in, is a large presumption.

My opinion of your dismissive exercises this far"? Rampant, superficially argued dogma on full display here. Forget Prechter and Elliott Wave. He never took 50 million dollars out of the market. Try sounding convincing here explaining to everyone that WD Gann was a deluded fraud and charlatan (because he was dumb enough to devote time to "technical analysis"). Methinks you will stumble trying to evidence this guy as a fool, and appear to be flailing at arguments, in short order.


why don't even well educated people understand that? have a friend who is dogmatic about elliot wave. i ask, 'have you ever counted up all of your trades and figured out if, minus what you spend in the wave stuff, trading costs, taxes, etc, you are making money?'

his answer... 'i don't need to. i know i'm making money!'

santafe2
02-13-09, 07:28 PM
It's fine for Buffett to be a Graham type investor. He can afford private investigations and interviews with auditors and so on ..

You and I CANNOT.
You and I CANNOT see beyond the shoddy accounting that's available to us.

IMHO, it's IMPOSSIBLE for a regular person today to be a Graham type "investor".

Whoa, Spartacus. the inquiry was about gold. Gold, not Goldman. I was observing that there is investing and there is speculating. I wasn't suggesting that the game is run fairly or that anyone should be investing in stocks or bonds or... I hope it was obvious that I was even hinting that the only way I would buy gold is to scale in over time and not try to time entry points.

That said, I'm not buying today but if I was just getting started, I would buy today and begin to build the investment over time.

santafe2
02-13-09, 07:59 PM
why don't even well educated people understand that? have a friend who is dogmatic about elliot wave. i ask, 'have you ever counted up all of your trades and figured out if, minus what you spend in the wave stuff, trading costs, taxes, etc, you are making money?'

his answer... 'i don't need to. i know i'm making money!'

I made my case with regard to TA on iTulip a year ago so there's no reason to go into it again. I will say that EJ said something to the board with regard to TA that really struck me as true; how do you value your time doing all this work? And the answer for me was, I didn't. It's a hobby - I find it entertaining.

After I started my business last March, every day became a choice between business time, family/friends time and sleep. It was then I realized that I really had been spending a lot of time finding sets of mathmatical systems that would allow me to predict with some accuracy, short term market moves. Needless to say, I don't have time for any type of serious real time analysis but I've been very happy with the results following EJ's advice in 2007, (actually I didn't follow it until March when I noted it in one of my posts).

Spartacus
02-13-09, 08:00 PM
Agreed, on re-reading your post I realize I mistook your invocation of Graham, and you did not take a stance on regular people being able to do Graham/Dodd.


Whoa, Spartacus. the inquiry was about gold. Gold, not Goldman. I was observing that there is investing and there is speculating. I wasn't suggesting that the game is run fairly or that anyone should be investing in stocks or bonds or... I hope it was obvious that I was even hinting that the only way I would buy gold is to scale in over time and not try to time entry points.

That said, I'm not buying today but if I was just getting started, I would buy today and begin to build the investment over time.

hope you were sitting in a pentagram

Spartacus
02-13-09, 08:06 PM
duplicate of the above post.
There should be a way to delete one's own posts.

Contemptuous
02-13-09, 08:25 PM
I have the curious sensation of getting "talked around" on this thread. Here I am explaining to these guys that they are making grandiose, absolutist, sweeping and highly generalized assertions about a whole host of market particpants, and generally carrying on like opinionated ninnys, and they are talking over my shoulder but replying to none of it. One could construe it as meaning my qualifiers were full of crap. Or one could construe it to mean that replying substantively is not nearly as much fun as the original haughty dismissals were. Screw that nutty Gann guy. The money he peeled out of the markets is likely a myth. Sweeping dismissals are lots of fun! Much more fun than actually figuring out who made the most money, and what exactly they were doing to get it. Eh. :p

Sharky
02-13-09, 10:20 PM
IMHO, it's IMPOSSIBLE for a regular person today to be a Graham type "investor".

I've studied Graham and Buffet at length for years now, and I agree with you. However, the reasons why this is true point to much larger issues that I haven't heard much discussion about:

1. Financial accounting and reporting are no longer reliable
2. Financial analysts are not reliable
3. Ratings agencies are not reliable
4. Insurance companies are not reliable
5. Government economic statistics are not reliable
6. The people running most companies or the government can no longer be assumed to be telling the truth or providing the whole picture
7. The ongoing random government intervention in the markets (and the resulting side-effects) is impossible to predict. PPT, Fed, Congress, you name it and they love to intervene.

What's happened over the last 20 or 30 yrs is that the system has been increasingly gamed and manipulated. In spite of the oft-quoted disclaimer, it used to be that past performance was a good indication of future performance -- but that is no longer true. IMO, this is also a big reason why TA is not as useful as it perhaps once was. How can TA help you predict the next Black Swan?

Government loves the excuse that their deceptions are "for the public good." After all, "public confidence" is so important. And yet their lies and distortions undermine the very confidence that they think they are trying to support.

But the big, big problem here is not a short-term one. Capitalists (and even pseudo-Capitalists) require the ability to reasonably forecast the future in order to plan ahead: inventories, ordering, hiring, financing, manufacturing, etc. When the mechanisms for doing that are substantially damaged, as they have been, it also damages the very core of capitalism. Not only does that undermine the foundation of the capital markets, but it also presents huge societal risks; famine and mass shortages, for example, can easily result when predictability in certain sectors is lost or damaged.

Plus, who in their right mind would lend to or invest in a company when they can't trust the financial reports that the company produces or the ratings agencies that rate their debt, or the insurance companies that insure that debt? For example, the fact that banks were able to carry anything "off balance sheet" is absurd on the face of it from a pure accounting perspective. How much of the rest of the economy is "off the books"? My guess: much, much more than most people suspect!

santafe2
02-13-09, 10:55 PM
I've studied Graham and Buffet at length for years now, and I agree with you...[that investing like these two is no longer possible]

Um...I have an idea how you could invest just like Buffett...you could maybe buy BRKA? That would be exactly like investing just like Buffett and you could do it without any of the work or the staff.

Then you could use MACD historgrams, 50 DMA and support and resistance just like Luke does to be like a super Buffett, (Luke, I'm being sure not to talk around your posts...is this sufficient homage?).:)

Contemptuous
02-13-09, 11:14 PM
Santafe2 -

I'm not some sort of rabid technical analysis aficionado. The spoof about my being some superman-warren buffet thanks to recognising the usefulness of support and resistance lines is frankly nonsense. I don't even have any huge interest in technical analysis. If one or two people were more alert to the wider issue that would never have even been your assumption.

What I object to is the occasional casually delivered, over-assertive throw-away iTulip claim, which suggests that about half the entire population of finance or economic analysts (or in other words, about one half of the professionals who maybe got a Phd in economics and are market watchers as is iTulip) is comprised merely of frauds because maybe they even just incorporate a "technical analysis" approach among theor various eclectic methods. Meanwhile iTulip barely wave a hand in the vaguest terms (other than ample ready caricature) to even define what "TA" is, yet there are dozens of ways this term may be construed. And I'm treated to the spectacle of the entire iTulip readership sitting there like so many marshmallows, not uttering the smallest peep. Not even something bland, like: "but Fred, wouldn't it be just a shade more prudent of iTulip, to assert that they distrust this technician's approach, as opposed to referring to it as fraudulent"?

I don't care so much about the technical analysis, nor have a huge fascination for it. What I do care about and object to, is editors being able to throw out brazen statements consigning half the market professionals out there (many quite smart, skeptical and discerning, even with doctorates) to the status of patsies and frauds while the readership sits here mutely, in uncritical and approving silence. Tell me, how would iTulip know that "beyond any doubt", exactly? Anybody ask? And what about that irksome WD Gann guy? Crack open a book of his essays on technical analysis and it's enough to give Fred dyspepsia over how inane Gann sounds with that "technical mumbo jumbo" while he was raking in 50 million dollars.

But the irksom fact is, the guy pulled more speculative money out of the market than you, I, Fred, EJ, the facilely doubting Spartacus and Metalman, and the whole fricking pile of people reading here will likely earn or speculatively win, collectively - in a lifetime.

No comment? No-one offers a murmur because this place is a place where you open the lid on the top of your head, and the editorial staff fill up the actionable-intelligence-pan underneath that lid, with their (occasionally overweening) opinions as to what's real and what's not in the world, and it would be terribly bad form for you to once in a while tell iTulip their summary dismissals of the life's work of people like WD Gann beg the question whether they've ever heard of the concept of an even perfunctory professional modesty (let alone courtesy). The guy ran circles around iTulip as far as outguessing the markets, and would likely have done so even with one hand tied behind his back and one leg in a cast. It is not technical analysis that I'm infatuated with at all. Rather, it is the overweening claims to have encompassed sufficient "absolute truth" to dismiss the other half of the professionals working around you beyond any possible appeal - that's what sticks in my throat like a chicken bone. Not your throat, apparently.


Um...I have an idea how you could invest just like Buffett...you could maybe buy BRKA? That would be exactly like investing just like Buffett and you could do it without any of the work or the staff. Then you could use MACD historgrams, 50 DMA and support and resistance just like Luke does to be like a super Buffett, (Luke, I'm being sure not to talk around your posts...is this sufficient homage?).:)


We have the same attitude about trading based on TA as we have toward casino gambling and state lotteries ... schemes designed to seperate people from their money based on marketing that selectively presents the product's or service's performance ....

... easy to debunk technical analysis. All you have to do is collect a series of forecasts that were based on technical analysis and compare them to actual results ... such is human nature and the dogged determination of the gambling mind to accept the fantasy ....

We make about ten cents every time a member buys the book, by the way. Not as good as the hundreds of dollars we'd make selling trading junk, but that's the difference between what you can make on get rich quick schemes versus cold, hard reality. :)

ze100
02-14-09, 02:22 AM
I don't see why all types of analysis cannot be used to form a hypothesis. Certainly technical analysis can provide insights as can macro economic analysis, fundamental analysis or behavioural analysis.

Just take it all - put it together and at some stage you'll clear out the BS from the important.

santafe2
02-14-09, 02:34 AM
I'm not some sort of rabid technical analysis aficionado.

Um...I was just having some fun?! Your charts with the silicon implant diagrams jutting left and right made me misjudge your intention. My mistake, but weren't you a little rabid at the edges? I assumed you were making the point that with your magical gold chart you could take the 2001 up move and turn it into an exponential move mere mortals could not imagine.


I don't even have any huge interest in technical analysis. If one or two people were more alert to the wider issue that would never have even been your assumption. Thanks for acknowledging my joke. I can mine that one much deeper when I have time.


What I object to is the occasional casually delivered, over-assertive throw-away iTulip claim, which suggests that about half the entire population of finance or economic analysts (or in other words, about one half of the professionals who maybe got a Phd in economics and are market watchers as is iTulip) is comprised merely of frauds because maybe they even just incorporate a "technical analysis" approach among theor various eclectic methods. Half of all economic PhDs are frauds...It must be exponentially higher than that. Really, do you only think it's half?


...many quite smart, skeptical and discerning, even with doctorates...Everyone with enough money can have one. You really don't want to put yourself in the position of defending children in school getting their 3rd degree with no experience. If it's an MD, fine. Otherwise the damn thing better be in a hard science.


...to the status of patsies and frauds while the readership sits here mutely, in uncritical and approving silence...Huh?


And what about that irksome WD Gann guy? Crack open a book of his essays on technical analysis and it's enough to give Fred dyspepsia over how inane Gann sounds with that "technical mumbo jumbo" while he was raking in 50 million dollars. Can Fred take this on right after his assault on astrology?


But the irksom fact is, the guy pulled more speculative money out of the market than you, I, Fred, EJ, the facilely doubting Spartacus and Metalman, and the whole fricking pile of people reading here will likely earn or speculatively win, collectively - in a lifetime. Sorry Luke, you know this false logic is complete BS. It's not up to this community to prove that Gann is not astrological BS, it's your job to prove how that astrological BS could possibly provide a regular profit today. We await your proof.

santafe2
02-14-09, 02:53 AM
I don't see why all types of analysis cannot be used to form a hypothesis. Certainly technical analysis can provide insights as can macro economic analysis, fundamental analysis or behavioural analysis.

Just take it all - put it together and at some stage you'll clear out the BS from the important.

To answer your question, I would not use astrology but it's been advocated, although indirectly, (Gann). That's one type of analysis that might be suspect. Do you have a particular group of technical tools you're advocating? I don't mean to call you out with this post, just give you fair warning that you'll need a strong argument around here if you want to offer TA as something with value.

Chris Coles
02-14-09, 03:49 AM
No comment? No-one offers a murmur because this place is a place where you open the lid on the top of your head, and the editorial staff fill up the actionable-intelligence-pan underneath that lid, with their (occasionally overweening) opinions as to what's real and what's not in the world, and it would be terribly bad form for you to once in a while tell iTulip their summary dismissals of the life's work of people like WD Gann beg the question whether they've ever heard of the concept of an even perfunctory professional modesty (let alone courtesy). The guy ran circles around iTulip as far as outguessing the markets, and would likely have done so even with one hand tied behind his back and one leg in a cast. It is not technical analysis that I'm infatuated with at all. Rather, it is the overweening claims to have encompassed sufficient "absolute truth" to dismiss the other half of the professionals working around you beyond any possible appeal - that's what sticks in my throat like a chicken bone. Not your throat, apparently.

From what I have seen here, EJ has created a financially viable business for the long term, pays his bills and makes a good living for himself and his associates. He has done that in his own way. Not my way, or your way either. I salute them as a team for their obvious success. They have not set out to advocate anything other than create a forum where anyone may voice their opinions and for others to debate.

A very simple, effective and successful business model. But business is way more than any technical analysis of any trade in anything being traded. No one succeeds without an underlying successful business model.

Contemptuous
02-14-09, 04:05 AM
Santafe2 -

I can't make heads or tails of any of your responses. Why can't you offer straight answers rather than this cute stuff? "Half of all Phd"s are frauds". "Can Fred take this on right after his assault on astrology?" - Well you seem in fine form with the throwaway lines this evening chum. Right up there in the tall saddle with the editors today.


Um...I was just having some fun?! Your charts with the silicon implant diagrams jutting left and right made me misjudge your intention. My mistake, but weren't you a little rabid at the edges? I assumed you were making the point that with your magical gold chart you could take the 2001 up move and turn it into an exponential move mere mortals could not imagine.

Thanks for acknowledging my joke. I can mine that one much deeper when I have time.

Half of all economic PhDs are frauds...It must be exponentially higher than that. Really, do you only think it's half?

Everyone with enough money can have one. You really don't want to put yourself in the position of defending children in school getting their 3rd degree with no experience. If it's an MD, fine. Otherwise the damn thing better be in a hard science.

Huh?

Can Fred take this on right after his assault on astrology?

Sorry Luke, you know this false logic is complete BS. It's not up to this community to prove that Gann is not astrological BS, it's your job to prove how that astrological BS could possibly provide a regular profit today. We await your proof.

Contemptuous
02-14-09, 04:07 AM
Chris -

I can only congratulate you for "commending them on their success". I certainly do as well. But what is your point exactly? My point was that they have here dismissed large segments of their competitors in a quite obviously peremptory way. Yes? Please understand the point. It is not their competitors dismissing iTulip for being specious. It is iTulip dismissing it's competitors (with a very broad wave of the hand towards "TA" whatever that supposedly encompasses) for being specious. You say "they have not set out to advocate anything other than" - not true. My only objection here is precisely that they are advocating a very broad group of other analysts as being incompetent.

It seems to this reader that any party making such advocations should prepare for one or two readers to legitimately challenge them to substantiate such sweeping assertions. Santafe2 above seems to get it back to front, wanting me to substantiate any objection. But it is not me who is "advocating" that one or the other group are a bunch of "incompetents and willful frauds". I advocate that BOTH they AND iTulip have valuable contributions. It is ITULIP who is actively advocating that others are incompetent and fraudulent. Apparently the doughty Santafe2 wants me to "substantiate" my objection. :rolleyes:

Seems a back to front logic to me. Without using any fancy language or misplaced diplomacy (where it is manifestly abandoned elsewhere), here's the point: If anyone wants to sling their ego around claiming broad groups of others are incompetents and frauds, particularly when those others are not leveling similar denigrations at you - seems to my old fashioned sense of fair play, the burden is on iTulip to substantiate it's claims or tone them down. Go ahead and show us for instance, where that WD Gann guy came by his 50 millions despite his "delusions" about technical insights to be gleaned from the markets. Or at very least, put up with comments from a reader or two here, that such assertions of incompetence among technicians may seem a little cavalier.


From what I have seen here, EJ has created a financially viable business for the long term, pays his bills and makes a good living for himself and his associates. He has done that in his own way. Not my way, or your way either. I salute them as a team for their obvious success. They have not set out to advocate anything other than create a forum where anyone may voice their opinions and for others to debate.

A very simple, effective and successful business model. But business is way more than any technical analysis of any trade in anything being traded. No one succeeds without an underlying successful business model.

*T*
02-14-09, 07:08 AM
To answer your question, I would not use astrology but it's been advocated, although indirectly, (Gann). That's one type of analysis that might be suspect. Do you have a particular group of technical tools you're advocating? I don't mean to call you out with this post, just give you fair warning that you'll need a strong argument around here if you want to offer TA as something with value.

I've given a strong argument and references elsewhere on these pages.

To summarise:
Either prices are Markov (http://en.wikipedia.org/wiki/Markov_chain) or they're not.

There is good, empirical evidence that prices are not Markov. Also that probability distributions of future price returns are not stable.

I used to market-make options for one of the top three US houses. Efficient market theory and Black-Scholes assumes the Markov property and stable distributions. In fact, volatility (i.e. options) trade with skew, and a term structure. A term structure to implied volatility implies mean reversion or trending. This implies dependence of price on price history. This is mathematically provable. And empirically, with the right kind of study. See Mandelbrot's thesis for example. A pariah in Economics for his heresy, where he started, he pretty much invented a whole new area of mathematics (fractals).

The existence of a business cycle also implies long-range order. Minsky talked about expectations informing buying decisions. Soros also refutes the idea of an efficient market.

My own opinion is that the use of credit in markets is what gives it these dynamics and price history.

If the markets have no long-range order, you could make billions in the options markets.

For an introduction, read for example A Non-Random Walk Down Wall St (http://www.amazon.com/Non-Random-Walk-Down-Wall-Street/dp/0691092567), a collection of serious academic studies on the issue.

I am NOT saying 'all technical analysis works'. I am NOT advocating use of astrology in investment.

I AM saying some technical analysis has verifiable empirical basis. And I AM saying that the received wisdom of Black-Scholes, efficient markets, rational expectations, stock returns as a Markov chain etc, is empirically WRONG.

To lump people like Mandelbrot together with astrologers is insulting to the serious academic work done and is plain ignorant. What we are presented is a straw man argument and dogma.

And whenever I say this, NO ONE has disagreed. So I issue the challenge, where am I wrong?

Slimprofits
02-14-09, 10:31 AM
<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/7EjdC0pjo1A&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/7EjdC0pjo1A&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

Billy Ray Valentine on the fundamentals of pork bellies:

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c1ue
02-14-09, 10:43 AM
SF,

It is useless debating with Lukester.

Far better to let time take its toll.

His rapid peak oil pronouncements underpinning his $200 oil in 2 years is at grave jeapordy; his silver ratio rising vs. gold also has been a rough ride.

Might as well let him continue to place his faith in technical analysis.

After all, if WD Gann or whomever modern Rasputin made XXX dollars, they must be right.

Just like Bernie Madoff - after all, $50B invested must be right too?

brucec42
02-14-09, 04:42 PM
why don't even well educated people understand that? have a friend who is dogmatic about elliot wave. i ask, 'have you ever counted up all of your trades and figured out if, minus what you spend in the wave stuff, trading costs, taxes, etc, you are making money?'

his answer... 'i don't need to. i know i'm making money!'


I remember how you used to hear about "biorhythms", they even had machines where you could pop in some money and it would do its magic and print yours out for you.

Spartacus
02-14-09, 05:43 PM
After all, if WD Gann or whomever modern Rasputin made XXX dollars, they must be right.
Just like Bernie Madoff - after all, $50B invested must be right too?

I've read of Gann a few times

Never published his entry and exit points before hand, claimed to have made money much later.

Like the psychics and faith healers and ESPers and astrologers and cancer curers, "the effect" vanishes when you ask for repeated, verifiable proof.

As the Quebequois say, "SUIVANT!!!"
(for you anglos, "NEXT !!!")

Spartacus
02-14-09, 05:48 PM
I remember how you used to hear about "biorhythms", they even had machines where you could pop in some money and it would do its magic and print yours out for you.

If you don't ask for proof for small woo-woo, how will you stop yourself from letting that small thing build?

It IS the thin edge of the wedge.

When I used to get into knock-down drag-out Interwebs arguments about this I'd always ask, if you want to give your own personal woo-woo (or Rasputin, as C1ue would say) the benefit of the doubt, why not this guy?

http://en.wikipedia.org/wiki/Heaven%27s_Gate_(cult))

or any of a hundred other links to various of Applewhite's fellow travelers, Jones, Koresh, Cruise, Travolta ...

Not that I ever convinced any true believer ...
As someone who had his mind changed it amazes me how closed minded these people are. Of course, they are always the first to throw out "you're closed minded".

metalman
02-14-09, 07:09 PM
i'm equally closed minded about santa claus and technical analysis and for the same reason... they were both made up to fool children.

Contemptuous
02-14-09, 07:15 PM
i'm equally closed minded about santa claus and technical analysis and for the same reason... they were both made up to fool children.

You guys ever thought of starting a men's club? You could wear kilts and sit around in a sauna, thrashing yourselves with birch branches while telling clubby tribal anecdotes about grueling rites of manhood? Or maybe rally around a stonehenge circle, reciting druidic incantations to enhance virility and "rationalism" while quaffing soured goat's milk laced with hootch? :rolleyes:

metalman
02-14-09, 07:18 PM
You guys ever thought of starting a men's club? You could wear kilts and sit around in a sauna, thrashing yourselves with birch branches while telling clubby tribal anecdotes about grueling rites of manhood? Or maybe rally around a stonehenge circle, reciting druidic incantations to enhance virility and "rationalism" while quaffing soured goat's milk laced with hootch? :rolleyes:

have you been spying on me?

Contemptuous
02-14-09, 07:27 PM
No actually this was more about BruceC42 and Spartacus. Everybody knows you are 100% Normal.



Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">Originally Posted by Lukester http://www.itulip.com/forums/images/buttons/viewpost.gif (http://www.itulip.com/forums/showthread.php?p=76773#post76773)
You guys ever thought of starting a men's club? You could wear kilts and sit around in a sauna, thrashing yourselves with birch branches while telling clubby tribal anecdotes about grueling rites of manhood? Or maybe rally around a stonehenge circle, reciting druidic incantations to enhance virility and "rationalism" while quaffing soured goat's milk laced with hootch? :rolleyes:

</TD></TR></TBODY></TABLE>
have you been spying on me?

santafe2
02-14-09, 08:04 PM
...why not this guy?

http://en.wikipedia.org/wiki/Heaven%27s_Gate_(cult) (http://en.wikipedia.org/wiki/Heaven%27s_Gate_%28cult%29))


Are you saying it's a San Diego connection?...humm...maybe it's the water.

Spartacus
02-14-09, 08:10 PM
No, just being extreme to make a point.


Are you saying it's a San Diego connection?...humm...maybe it's the water.

Well, OK - Maybe subconsciously ; )

Down Under
02-16-09, 03:40 PM
lowest spot on the tic? daily close? weekly average? monthly average? he doesn't say. question is... if you bought at $780 and gold fell to $700 before heading to $940 today, how'd you feel? better than if you waited for $700 and it fell to $500? better than the die hard deflationists who are still waiting for $650 to come around any day now?

no one ever calls a perfect bottom, except mega... but then we're not talking about gold in that case. :D

Before we get into some misunderstanding, I have tremendous respect for EJ and iTulip, along with many others.

However, since one of iTulip's claims is to be primarily data driven, I don't think it's accurate to state, unless qualified, that the low in gold was USD 740. It clearly was not.

Now, as you correctly point out, the USD 740 low was not qualified. It may well have been the low on a weekly or monthly basis. Fair enough.

labasta
02-16-09, 03:52 PM
I'm hearing so many cases of fraud worldwide at the moment. Has anyone picked up on the 1.3 billion dollar fraud in Iraq by the US military? I mean skimming form the top is all well and good, but plain out stealing the whole lot.. well...

Regarding Ireland.

I'm really pissed at the whole thing with the banks at the moment.

The directors of AngloIrish gave themselves non-recourse loans based on collateral of their own AngloIrish shares. One of these loans was for 87 million Euro. We are talking hundres of millions here. Fine right? Well when the bank goes bankrupt, the shares are worth nothing. They don't have to pay back the bank as the loans are non-recourse. In effect, they just stole the money for themselves.

Now, the ruling party (FF) use the bank for their own funds (apparently) and the finance minister took advice from the directors of the bank. He saves angloIrish bank by raiding the civil servants pension fund to the tune of 7 billion. This has been estimated to be nowhere near enough. Who tops up the missing 7 billion? Is it the directors? Noooo, of course not. The civil servants have to pay an extra pension levy of around (after tax) between 3.5 and 9% of gross income. This is at a time when pivate AND (although much less) public sector workers are losing their jobs and having their wages decreased. The ones with massive mortgages are taking a bigger hit. If mortgages can't be paid, the banks take the hit and so on.


Basically, what I am saying is that the ones who stole, frauded, created the mess are not paying for it but making off like bandits and leaving the rest of us to pay and become poorer.

It would have been the same if a few years ago during the bubble years the government had created an AngloIrish monthly tax levy of around 5% to be paid to the directors of AngloIrish bank directly.

I mean Germany has compulsory medical insurance (also known as a tax) to keep its med industry in lolly, why not the banks too. Let's have politically in their pocket industry taxes!

30% for the banks
20% for the med industries
5% for petroleum companies
10% other energy taxes
2% for the church of your choice

Can we think of any other industries which like to kept in the manner they are accustomed to?

Now, if only I could set up a company to pay off a load of politicians and create my own tax on the people.

lausanne
02-16-09, 10:24 PM
Why consider the 382 point drop response to Geithner as proof of the unworkable nature of his proposal? Isn't the market looking to prop equity values up, ie don't see his announcement as helping them?

Contemptuous
02-16-09, 11:10 PM
A tour de force response, Mr. *T*. Notice the clamor of arguments pressed here to dispel your assertions. :rolleyes:

As you so delicately put it:

"To lump people like Mandelbrot together with astrologers is insulting to the serious academic work done and is plain ignorant. What we are presented is a straw man argument and dogma."

The simple but profound thesis, that a market can display order derived from it's own precedent apparently brutally violates some of the most cherished beliefs of those who insist that only "pure" randomness can correspond plausibly to market action. Such opinions inadvertently refute the potential for REAL complexity.

At the heart of this assumption is a lazy premise - that any assertions to the contrary are antithetical to "rationalism". I have tremendous respect for all dissenting contributors. But there is a certain amount of dogma reflected in such an opinion. Spartacus' subscribes to these refutations, but his suggestion in the post directly below was actually a quite valuable suggestion.

Employ a 'hypothetical" that is 180 degrees opposite to your own opinions regularly - otherwise you are not fully examining the risk that some opinions are based on mere assumptions. The more peremptory and sweeping assumptions are the riskiest.


He recommends that whatever position you normally champion, turn it off for a while and IN GOOD FAITH, do the opposite analysis.


I've given a strong argument and references elsewhere on these pages.

To summarise:
Either prices are Markov (http://en.wikipedia.org/wiki/Markov_chain) or they're not.

There is good, empirical evidence that prices are not Markov. Also that probability distributions of future price returns are not stable.

I used to market-make options for one of the top three US houses. Efficient market theory and Black-Scholes assumes the Markov property and stable distributions. In fact, volatility (i.e. options) trade with skew, and a term structure. A term structure to implied volatility implies mean reversion or trending. This implies dependence of price on price history. This is mathematically provable. And empirically, with the right kind of study. See Mandelbrot's thesis for example. A pariah in Economics for his heresy, where he started, he pretty much invented a whole new area of mathematics (fractals).

The existence of a business cycle also implies long-range order. Minsky talked about expectations informing buying decisions. Soros also refutes the idea of an efficient market.

My own opinion is that the use of credit in markets is what gives it these dynamics and price history.

If the markets have no long-range order, you could make billions in the options markets.

For an introduction, read for example A Non-Random Walk Down Wall St (http://www.amazon.com/Non-Random-Walk-Down-Wall-Street/dp/0691092567), a collection of serious academic studies on the issue.

I am NOT saying 'all technical analysis works'. I am NOT advocating use of astrology in investment.

I AM saying some technical analysis has verifiable empirical basis. And I AM saying that the received wisdom of Black-Scholes, efficient markets, rational expectations, stock returns as a Markov chain etc, is empirically WRONG.

To lump people like Mandelbrot together with astrologers is insulting to the serious academic work done and is plain ignorant. What we are presented is a straw man argument and dogma.

And whenever I say this, NO ONE has disagreed. So I issue the challenge, where am I wrong?

metalman
02-17-09, 12:10 AM
A tour de force response, Mr. *T*. Notice the clamor of arguments pressed here to dispel your assertions. :rolleyes:

As you so delicately put it:

"To lump people like Mandelbrot together with astrologers is insulting to the serious academic work done and is plain ignorant. What we are presented is a straw man argument and dogma."

The simple but profound thesis, that a market can display order derived from it's own precedent apparently brutally violates some of the most cherished beliefs of those who insist that only "pure" randomness can correspond plausibly to market action. Such opinions inadvertently refute the potential for REAL complexity.

At the heart of this assumption is a lazy premise - that any assertions to the contrary are antithetical to "rationalism". I have tremendous respect for all dissenting contributors. But there is a certain amount of dogma reflected in such an opinion. Spartacus' subscribes to these refutations, but his suggestion in the post directly below was actually a quite valuable suggestion.

Employ a 'hypothetical" that is 180 degrees opposite to your own opinions regularly - otherwise you are not fully examining the risk that some opinions are based on mere assumptions. The more peremptory and sweeping assumptions are the riskiest.

not either random or astrology. all non probabilistic short term trading success is due to either 1. chance or 2. insider info.

*T*
02-17-09, 04:51 AM
not either random or astrology. all non probabilistic short term trading success is due to either 1. chance or 2. insider info.

That does not contradict my statements in any way.

brucec42
02-19-09, 12:56 PM
No actually this was more about BruceC42 and Spartacus. Everybody knows you are 100% Normal.

Well, there are only so many methods to choose from when making investment choices;

1. Subscribing to someone's website who uses technical analysis and bases the probability of market changes on purely historical data, the shape of particular squiggly lines, and the concept that markets are perfect, yet for only $19.95 or $49.95 a month they will share their sure fire weath strategy with me rather than simply placing all their money in futures contracts and becoming a billionaire in the next year.

2. Throwing stones on a table and interpreting what they augur for the future,

3. using a ouija board,

4. consulting Simon the "mentalist",

5. Reading tea leaves,

6. Trusting in magic beans

7. Spending hours researching the economy and using knowledge and fundamental analysis harvested by others over countless hours to try to predict the very unpredictable reactions of the market and government and try to beat them to a particular spot.


Unfortunately technical analysis was the least persuasive.

metalman
02-19-09, 01:06 PM
Well, there are only so many methods to choose from when making investment choices;

1. Subscribing to someone's website who uses technical analysis and bases the probability of market changes on purely historical data, the shape of particular squiggly lines, and the concept that markets are perfect, yet for only $19.95 or $49.95 a month they will share their sure fire weath strategy with me rather than simply placing all their money in futures contracts and becoming a billionaire in the next year.

2. Throwing stones on a table and interpreting what they augur for the future,

3. using a ouija board,

4. consulting Simon the "mentalist",

5. Reading tea leaves,

6. Trusting in magic beans

7. Spending hours researching the economy and using knowledge and fundamental analysis harvested by others over countless hours to try to predict the very unpredictable reactions of the market and government and try to beat them to a particular spot.


Unfortunately technical analysis was the least persuasive.

'The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.'
- Jesse Livermore

Chris Coles
02-19-09, 04:02 PM
Ah! Yes, but the successful man has made it a matter of importance that they have gleaned as much information, from as many sources as possible, to allow them to make a considered decision.:)

Contemptuous
02-20-09, 11:44 PM
I've given a strong argument and references elsewhere on these pages. ... See Mandelbrot's thesis for example. A pariah in Economics for his heresy ... he pretty much invented a whole new area of mathematics (fractals). ... The existence of a business cycle also implies long-range order. Minsky talked about expectations informing buying decisions. Soros also refutes the idea of an efficient market. ... My own opinion is that the use of credit in markets is what gives it these dynamics and price history. ... If the markets have no long-range order, you could make billions in the options markets. ... And whenever I say this, NO ONE has disagreed. So I issue the challenge, where am I wrong?

Came across this quote today and thought of your comments here *T*. Thanks again for interjecting some senior arguments on a topic I've long intuited was a good deal more complex than the putative "rationalists" so peremptorily insist. It's not the disagreement that gets under my skin - disagreement is a wonderful thing - it is the peremptory self assurance of the dismissals which lends an unattractive complexion to any supposedly genuinely inquiring discourse. The idea that markets really do have a structure is intriguing almost in proportion to the extent that it regularly finds ridicule.

_________________

Work of Benoit Mandelbrot acknowledged - by Anatole Kaletsky

"Bit by bit, from a bad seed a big but sickly tree is built with glue, nails, screws and scaffolding. Conventional economics assumes the financial system is a linear, continuous, rational machine and these false assumptions are built into the risk models used by many of the world's banks. As a result, the odds of financial ruin in a free global market economy have been grossly underestimated.

By using such methods there is no limit to how bad a bank's losses can get. Its own bankruptcy is the least of the worries; it will default on its obligations to other banks - and so the losses will spread from one inter-linked financial house to another. Only forceful action by regulators to put a firewall round the sickest firms will stop the crisis spreading. But bad news tends to come in flocks and a bank that weathers one crisis may not survive a second or a third." "

This uncannily precise description of the present crisis above was not written by an economist. While some economists had warned for years about global trade imbalances, escalating house prices, of excessive consumer borrowing, none of them remotely foresaw the truly unprecedented feature of the present crisis: the total breakdown of financial markets caused by the unforced blunders by investors and banks.

Modern economists were inherently incapable of understanding such a problem because they assumed that investors were ‘rational’ and markets ‘efficient’. "These assumptions led inevitably to disaster once they were blown apart. The author who came so close to understanding the true causes of the present crisis was not an economist but a mathematician.

"Benoît Mandelbrot, a towering figure of 20th-century science, who invented fractal geometry and pioneered the mathematical analysis of chaos and complex systems, wrote the above words six years ago in his book The Misbehaviour of Markets. Mandelbrot's ideas found fruitful applications in the study of earthquakes, weather, galaxies and biological systems from the 1960s onward, but the field that originally inspired his ideas turns out, in this very readable book, to have been finance and economics.

Yet 40 years of effort by Mandelbrot to interest economists in the new mathematical methods, which appear to work far better in modelling extreme movements in financial markets than the conventional methods based on statistically ‘normal’ distributions, have been either ridiculed or ignored."

Chris Coles
02-21-09, 03:28 AM
Came across this quote today and thought of your comments here *T*. Thanks again for interjecting some senior arguments on a topic I've long intuited was a good deal more complex than the putative "rationalists" so peremptorily insist. It's not the disagreement that gets under my skin - disagreement is a wonderful thing - it is the peremptory self assurance of the dismissals which lends an unattractive complexion to any supposedly genuinely inquiring discourse. The idea that markets really do have a structure is intriguing almost in proportion to the extent that it regularly finds ridicule.

Lukester, have you ever heard of the old saying: "Talk about the pot calling the kettle black"? But I have to admire your turn of phrase... :):):)



Work of Benoit Mandelbrot acknowledged - by Anatole Kaletsky

"Bit by bit, from a bad seed a big but sickly tree is built with glue, nails, screws and scaffolding. Conventional economics assumes the financial system is a linear, continuous, rational machine and these false assumptions are built into the risk models used by many of the world's banks. As a result, the odds of financial ruin in a free global market economy have been grossly underestimated.

By using such methods there is no limit to how bad a bank's losses can get. Its own bankruptcy is the least of the worries; it will default on its obligations to other banks - and so the losses will spread from one inter-linked financial house to another. Only forceful action by regulators to put a firewall round the sickest firms will stop the crisis spreading. But bad news tends to come in flocks and a bank that weathers one crisis may not survive a second or a third." "

This uncannily precise description of the present crisis above was not written by an economist. While some economists had warned for years about global trade imbalances, escalating house prices, of excessive consumer borrowing, none of them remotely foresaw the truly unprecedented feature of the present crisis: the total breakdown of financial markets caused by the unforced blunders by investors and banks.

Modern economists were inherently incapable of understanding such a problem because they assumed that investors were ‘rational’ and markets ‘efficient’. "These assumptions led inevitably to disaster once they were blown apart. The author who came so close to understanding the true causes of the present crisis was not an economist but a mathematician.

"Benoît Mandelbrot, a towering figure of 20th-century science, who invented fractal geometry and pioneered the mathematical analysis of chaos and complex systems, wrote the above words six years ago in his book The Misbehaviour of Markets. Mandelbrot's ideas found fruitful applications in the study of earthquakes, weather, galaxies and biological systems from the 1960s onward, but the field that originally inspired his ideas turns out, in this very readable book, to have been finance and economics.

Yet 40 years of effort by Mandelbrot to interest economists in the new mathematical methods, which appear to work far better in modelling extreme movements in financial markets than the conventional methods based on statistically ‘normal’ distributions, have been either ridiculed or ignored."


My problem here is twofold; Anatole Kaletsky has very consistently shown a classic economists false idea of what has happened in financial markets. He simply does not understand what has occurred. For example, it is very clear that he had no idea about the leverage going on, right beneath his proverbial nose. As a result he has been flailing about like a man drowning, grasping at straws for want of a solution.

My second reservation relates to my own thinking, that we have been "sold a pup" by the FIRE economy by being led into thinking that we have been operating within a capitalist system. That introduces the thought that, as with a computer, input junk and all you get at the other end is more of the same.

No, I am not depreciating Mandelbrot, but if we base his thinking on the self same misunderstanding about the nature of capitalism, we end up in the same mess; junk in junk out.

In my opinion, the problem is not the nature of the "market" for that is a classic red herring, it is our misunderstanding of the true nature of a feudal mercantile economy.

Chris.

vanvaley1
02-21-09, 07:08 AM
Ah! Yes, but the successful man has made it a matter of importance that they have gleaned as much information, from as many sources as possible, to allow them to make a considered decision.:)

Then fnding it unnessary and too expensive to purchase tea they seek the augur of insight...and read the skid marks of their shorts.

Contemptuous
02-21-09, 01:21 PM
Brucec42 -

My comment was lighthearted, but if you do wish to offer a serious rebuttal and you do seem to be serious here, may I make a suggestion? Employing this labored a caricature of your options (the "so many methods" cartoon list illustrated below) does not make a strong argument. More constructively why don't you reply to *T*'s posts on the question rather than mine? I notice you guys all seem to have steered a "wide berth" around his replies? :D

Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">Originally Posted by *T* http://www.itulip.com/forums/images/buttons/viewpost.gif (http://www.itulip.com/forums/showthread.php?p=76674#post76674)
I've given a strong argument and references elsewhere on these pages. ... See Mandelbrot's thesis for example. A pariah in Economics for his heresy ... he pretty much invented a whole new area of mathematics (fractals). ... The existence of a business cycle also implies long-range order. Minsky talked about expectations informing buying decisions. Soros also refutes the idea of an efficient market. ... My own opinion is that the use of credit in markets is what gives it these dynamics and price history. ... If the markets have no long-range order, you could make billions in the options markets. ... And whenever I say this, NO ONE has disagreed. So I issue the challenge, where am I wrong?


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Well, there are only so many methods to choose from when making investment choices;

1. Subscribing to someone's website who uses technical analysis and bases the probability of market changes on purely historical data, the shape of particular squiggly lines, and the concept that markets are perfect, yet for only $19.95 or $49.95 a month they will share their sure fire weath strategy with me rather than simply placing all their money in futures contracts and becoming a billionaire in the next year.

2. Throwing stones on a table and interpreting what they augur for the future,

3. using a ouija board,

4. consulting Simon the "mentalist",

5. Reading tea leaves,

6. Trusting in magic beans

7. Spending hours researching the economy and using knowledge and fundamental analysis harvested by others over countless hours to try to predict the very unpredictable reactions of the market and government and try to beat them to a particular spot.


Unfortunately technical analysis was the least persuasive.