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>Bear markets that last more than 3 years are rare events indeed. I
believe there has only been one, the Great Depression.
Depending how you count it 1966 to 1982 was a "bear." For sure there
were bears longer than 3 years in that time:
http://www.sharelynx.net/Charts/USDJIND1950.gif
http://www.sharelynx.net/Charts/Historical.htm
FWIW, as I've stated here before, I think we are in a 70's style bear.
Most traders are either super bears or wish'n and hope'n bulls. A
grinding bear hurts the largest group and gives the PTBs time to suck
out the most money and retool.
You do make a point though: 3 years into the bear and the SPX and DJI
are still "OK" compared to a 30's style bear. If this were a Prechter
style doom and gloom super cycle bear like the 30's you'd think it'd
be worse by now. Of course the NDX HAS had a 30's style decline
already.
BW
--- In realtraders@xxxxxxxxxxxxxxx, "Ray Raffurty" <r.raffurty@xxxx>
wrote:
> Hi Gene,
>
> As you know you can write a formula(s) that will plot any curve.
Unfortunately, plotting a curve over a series of events such as the
stock market and then projecting that curve into the future, is
little better that speculation, and perhaps worse since with
speculation at least you can change your mind if you are wrong. If
it where possible someone would quickly draw all available money out
of the market and trading would stop. As one old Wall St. sage once
said; "Every time I think I have found the key to investing, someone
changes the lock".
>
> The problem with trend following is first determining when the
trend starts. By definition this is impossible (one data point is not
a trend, 3 points do not establish a pattern, 5 points may establish
a pattern but it takes 7 or more to become predictable and many more
to become reliable) so the best you can do is jump on an already
established trend. Secondly when outside events, including random
ones, can influence the trend, there is no way to reliably predict
when the trend will end (sorry Norman). Not being able to predict
when the trend will end and change is the death of all such systems
and the bank account of traders.
>
> Now look again at his chart and you will notice that there are many
data points well outside his curve. This means that he has applied a
high degree of interpolation to "fit" the curve. These "outside data
points will kill the average trader. And, anyone who has ever
developed a system will confirm the risks associated with curve
fitting to the data.
>
> His prediction on S&P500 of about 650 in 2004 would mean that the
average company would be selling for less than it's net asset value.
This can not happen for long since market forces will cause these
companies to return to the norm either thru stock purchases by value
investors or thru takeovers. Also remember that a major cause of a
stock's movement is based on future earnings. His chart implies that
there would be a MAJOR decrease in future earnings of S&P500
companies in mid 2003
>
> Finally history is strongly against him. Bear markets that last
more than 3 years are rare events indeed. I believe there has only
been one, the Great Depression. His prediction on S&P500 of about
650 in 2004 would mean that the average company would be selling for
less than it's net asset value. This can not happen for long since
market forces will cause these companies to return to the norm either
thru stock purchases by value investors or thru takeovers.
>
> Frankly, I don't see any real conviction on the part of Mr.
Sornette. He does not seem to have any understanding of the economy
or markets and has just made a random association between amplitude
increases, which can be observed in some but not all natural events
(a plucked note does not show this phenomenon at all) over some but
not all periods (earthquakes do but not consistently and not over all
time periods), and a particular period in the market (the last 3
years). This may look impressive and may get him a grant or even a
doctorial thesis subject but it is not a meaningful phenomenon.
>
> Good luck and good trading,
>
> Ray Raffurty
>
>
>
>
> ----- Original Message -----
> From: Gene Pope
> To: realtraders@xxxxxxxxxxxxxxx
> Sent: Wednesday, January 01, 2003 10:30 PM
> Subject: [RT] Re: Interesting Look at 2003
>
>
> Hehe... looks like I should have read my email first before
sending this?
>
> I take it there is no great enthusiasm for this approach? For
educational
> purposes, may I inquire why?
>
> Best regards,
>
> Gene (a little late in 2003) Pope
>
> ----- Original Message -----
> From: "Gene Pope" <gene@xxxx>
> To: "swingmachine-list" <swingmachine@xxxxxxxxxxxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Wednesday, January 01, 2003 10:24 PM
> Subject: Interesting Look at 2003
>
>
> > Hi all,
> >
> > I've had this chart stuck up on my wall for some months now.
Thought you
> > might find it of interest. It's based on the authors'
projections using
> log
> > periodic formulas.
> >
> > I've found it, in general, to be rather accurate so far.
> >
> > Just my rank speculation, but 2003 looks like a war that is
begun, then
> > either doesn't go quite as planned, or economic reality starts
to bite...
> > deeply. This would certainly be a final washout if it came to
pass.
> >
> > Like the weather, I still think the further out you go, the
less likely
> any
> > computed future comes to pass.
> >
> > Sorry, but I have read so many of these papers I'm not sure
which one this
> > came from... ;~)
> >
> > Happy New Year to all,
> >
> > Gene Pope
> >
>
>
>
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