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Be Financial Cycles Educated

Discussion in 'Historic Market Crashes' started by platinumdude, Feb 23, 2015.



  1. platinumdude

    platinumdude Gold Chaser Platinum Bling

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    http://www.befinancialcycleseducated.com/index.php/my-premise-and-why-i-have-it

    To present my premise and why I have it, I will give you a brief summary synopsis of what is really going on in the big picture - a few paragraphs - followed by other comments to fill in some important details. I also present most of these details individually at other links on this website, but I present them here together to provide an overview. Please note that there are other links on this website that highlight other details that are not presented here.

    My basic premise is that contrary to what Keynesian economists (who are most of the economists in America, including all of the economists in government) think, the Kondratieff wave has not been eliminated. The Keynesian economists think they have eliminated it - their evidence is the successful enforcement of the law against recessions (passed in 1978, first enforced in the wake of the stock market crash of 1987) for so many years until 2008. On the other hand, I actually predicted (to myself - I was not making public predictions at the time) in the summer of 2001 (when I found out about the law against recessions) that there would be a big stock market AND economic downturn sometime between 2007-2010 (which would be the beginning of more problems) and I did so by turning the situation on its head, taking the manipulations of the Keynesians into account relative to the Kondratieff wave. In other words, the Keynesians have not eliminated the Kondratieff wave, they have merely distorted it in the extreme (it can't be eliminated) - and that is why we have the situation that we have today.

    Stated another way, from the summer of 2001 onward (more explanation below), I knew that there would be a big economic downturn sometime between 2007-2010 - which the Fed would not be able to stop. We have had that economic downturn. But that downturn was not all that I predicted then (noting again that I was not predicting publicly back then - these were predictions to myself) - because I knew that the big downturn that would happen sometime between 2007-2010 would happen because the Fed was going to have lost control of the economy (that is the only way a big economic downturn can happen if there is literally a law against recessions passed by Congress - which there was - and the Federal Reserve is tasked by that law with preventing recessions from happening). I knew that once the Fed lost control (which it has in the meantime - we are now only in a large bear market bounce that would have happened anyway, explanation below), the stock market would return to trading in a normal way (which the Fed prevented from happening for many years when it successfully prevented deep recessions from happening), which means that the stock market would have an initial big downturn (which happened from October 2007 to March 2009, most people became aware of it when the crash happened in early October 2008, a year after the market had started dropping), followed by a big intermediate upturn (which I knew would, in fact, be a classic big bear market bounce, and it is) that would coincide with a partial recovery in the economy (and that is all now happening), followed by another large downturn, worse than the first one, that would normally, i.e. in the past, be the end of the process, but that I think will go deeper this time (explanation below) because of all the manipulation to the upside for years before (please read on, I do explain myself).

    Real estate initially turned down hard during the initial big downturn in the economy. There is not much of a recovery in it during the economic recovery - and since I know this is only a partial economic recovery (see below), I know that real estate will go down a lot more once the next downturn hits with full force. I think that downturn will be bad enough that it will cause real estate sales to go way down again, probably much lower than last time - and vehicle sales will go way down, as well, probably down more than they did in the last downturn. Sales of many other items probably will go down a lot, as well.

    Why is this? Because that second downturn is normally worse than the first one anyway - and I think this time, it will be worse because of all the pushing to the upside that has happened in the meantime. Simply put, I think that once the second downturn hits and people realize that the overall downturn is real after all, spending on all but personal essentials will stop - people will be conserving any cash they can, especially since most people don't have much cash to begin with - and in an economy that is 2/3 dependent on consumer spending, that will have a big impact.

    I think that given what is happening (and also taking into account what I know, see below), just about everyone who does not see what is coming (in most cases because they do not want to see what is coming) is going to be hit hard by what is coming. In fact, among the people I know personally, only the immigrants (people who have experience with very negative experiences in the past) see what is going on (none of the born-and-bred Americans do) - and I am the only one of the immigrants writing about it, probably because most of the rest of them are long-since retired. Most Americans are just choosing to look at the bright side (at least those who are at all in a position to do so, i.e., unlike the people who are running out of unemployment insurance, for example) and it is going to be a big, big problem for them. That is because what is happening in the country and around the world is part of a larger process (and I anticipated most of it for that reason) that has been building for years and will not go away and will continue to build (and it doesn't have much further to go) until a critical point is reached and anyone who is not prepared for that critical point when it happens will be hit hard. My sense of it is that the vast majority of Americans will be hit hard. Please read on, I come to a final conclusion about this at the bottom of this text on the basis of everything else that I note below. Trying to think positive to try to avoid what is going on financially and economically is simply not going to cut it in the current environment - acknowledging what is going on, realizing its implications, and preparing for what will come is the only realistic, effective way of dealing with it, i.e., of approaching it in a way that will leave one coming out ahead in the end. The vast majority of Americans will not do that.

    We are having a classic big bear market bounce - it started in early March 2009 with a classic very sharp and big initial rally (initial rallies in new bull markets are very sharp, but not very big - in other words, it is the very lack of bigness of the initial move in a new bull market that fools most people with regard to it being a new bull market and the very bigness of the initial move up in a bear market bounce that fools most people into thinking it is a new bull market), followed by a flattening out of the bear market bounce that then goes on for quite some time (new bull markets do not flatten out for nearly that long at a stretch). Once the initial big surge up is done, a classic, typical bear market bounce goes on for the rest of the time flat, or nearly flat with a slight upward bias (which, if that happens, especially keeps bullish hopes very alive), and that, the nearly flat kind, is what is happening in our case, and that will just continue (flat or nearly flat) until the bear market bounce has finally exhausted itself. When it has finally exhausted itself, the new bear market leg will start, one that is bigger than the initial one that most people noticed in the fall of 2008 (that is to say, the one that happened from October 2007 until March 2009) - and this time, the move will take us below 6,500 in the Dow (which was the previous low, in early 2009). The previous low before that was about 7,500 in the early 2000's (which was actually a double bottom in 2002 and 2003). Bear markets consist of a series of lower lows - that is what makes them bear markets. We have been in a bear market since 2000 (went into it coming out of the stock market exponential of the late 1990's) - and I expect the next low to happen at about Dow 5,500, or even below. I just can't tell you exactly when that will happen.



    (Much more at the link above).
     

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