crystal ball: the greatest show on earth

Forecasting. Prediction. Tea leaves and tarot cards. Everyone wants to know what the future holds. But which opinions are actually credible. In terms of economics and market prognostication there is more credibility given to those who have been correct in the recent past. However, the only constant seems to be that discontinuities in the past, -breaking the tendency that the future will be like today except more so- tend to be recurring phenomenon in the future. It is only in this sense that a future can look surprisingly like the past.   So, what ideas and individuals are worth actually investing in? Perhaps something in-between the sermons of a new gilded ages and apocalyptic doom.

Read More: ---There are two important lessons to learn from this. First, no matter how well researched and supported a future trend may be, if it doesn't consider what is happening to other, related trends, it is not at all trustworthy. ...up to period 4 everything seems rather calm. There is an aura of normalcy. Then, after period 4, to around period 11, trends do unexpected, even dramatic, things. ...considered a period of discontinuity or what I am calling here, a transformation. After period 11, although the trends are different, they once again become more predictable. ...That is a 'tomorrow is like today only more so' viewpoint. It is generally believed because of it....---

The natural tendency is to give more credence to those opinionators who have been right most recently.But, what was terrific and seemed prescient a couple years ago might simply have been a fortuitous combination of luck, circumstance and a big mouth, rather than profound wisdom. Only time will tell. However, if you do the accounting and keep tabs on forecasts and at a micro level, analysts predictions on stock price performance, it becomes apparent that precious few of these experts are more right than wrong. Even the category of usually right is an elite club. The fiasco, short selling and eventual cease trading order in Sino-Forest on the TSX is a case in point. Almost all analysts allegedly responsible for coverage on the stock rated the operation a buy or strong buy before Carson Block exposed the fraud. Still ,the show goes on, and the forecasting, the futurology of money and stocks remains “the greatest show on earth” the earthly sun, a golden calf of celestial proportions of which we place our faith and future. But why are we so disappointed?

Image: Read More: ---Michael Ferguson:Ray Kurzweil asserts that one S-Curve follows another, nesting in such a way to create a super exponential curve. In this he is wrong. In reality the same mechanisms that cause individual technologies to follow a sigmoid curve also apply to sequential technologies, what Kurzweil calls 'paradigms.' Consequently, rather than a 'Super Exponential Curve' they will follow a 'Super S-Curve.' However, whether trends are described as exponential or sigmoid equations, they will be endogenously related. When we endogenously relate a system of logistic equations, the result is extremely sensitive to even small differences in the coefficients of endogenous relationships. Also, they are prone to very dramatic events of discontinuity.

“It was not the French Evolution nor the Industrial Evolution nor the Sexual Evolution. History is not a story of trends. It is a story of periods of relative stability, punctuated by profound and rapid upheavals, discontinuities, transformations and realignments.” By imagining trends, whether linear or exponential, one is asserting that tomorrow will be like today, only more so. That has never been completely true and it is especially not true today…. “There is not a Science Future nor a Political Future nor an Economic Future. There is only one future and it embraces all elements that are studied by the various fields. Furthermore, there are identifiable interactions.” The present can only be really understood polymathically and the future is the same. Subject bias and worse, single subject analysis, simply cannot lead to reliable results.- Michael Ferguson read More:


At another level, there is also the issue of how society changes individual minds which runs counter to Margaret Thatchers assertion on society, that “there is no such thing.” However, social identity theory and the psychology of inter-group behavior does generate social change in unpredictable ways when individuality confronts the social reality of group identity and action. As society “regroups” as it appears to be forming in the United States, there is a crafting process underway of new relevant identities, or older shared social identities in new contexts resulting in different forms of social co-operation and cohesiveness that remains intangible and volatile in its absence of stability and predictability.

Image: Read More: ---Therefore we divided the world into “them” and “us” based through a process of social categorisation (i.e. we put people into social groups). This is known as in-group (us) and out-group (them). Social identity theory states that the in-group will discriminate against the out-group to enhance their self-image. The central hypothesis of social identity theory is that group members of an in-group will seek to find negative aspects of an out-group, thus enhancing their self-image. Prejudice between cultures may result in racism; in its extreme forms, racism may result in genocide, such as occurred in Germany with the Jews, in Rwanda between the Hutus and Tutsis and, more recently, in the former Yugoslavia between the Bosnians and Serbs. Henri Tajfel proposed that stereotyping (i.e. putting people into groups and categories) is based on a normal cognitive process: the tendency to group things together. In doing so we tend to exaggerate: 1. the differences between groups 2. the similarities of things in the same group. We categorise people in the same way.


The events of the future are massively interrelated and these endogenous relationships lead to one trend being constantly modified by several others. In order to reliably forecast the future, the whole must be considered in order to consider the part. Futurists, to date, do not think in this way. They tend to think in an ‘If A then B’ way rather than in endogenously related systems. Read More:

Image: Read More: ---Eisenstadt said, his model continues to issue a bullish signal, the next six among the stock market’s overall return rate 18%. with Eisenstadt’s own admission, this returns the number “sounds too good, people wonder whether it is true.” But he added, among the many career, he has learned “not to question (given the model) figure is not going to try to find reasons for.” Earlier this week, I had the emotional side according to the current stock market situation analysis, the bullish conclusion, and

enstadt’s model, its view clear and I are the same. However, some readers may wonder, is it not the stock market history 9 copies of the most terrible one? In this way, there really is too wonderful to hope that the numbers? However, we must understand that even if this would indeed repeat the history of 9 tracks, were a disappointment, from Eisenstadt’s prophecy fulfilled there are still five time.---


…Among the few that can boast a decent record is Sam Eisenstadt, the 83-year-old former research director of Value Line, the investment publishing firm.

At an age when most of his colleagues are content to watch golf, Mr. Eisenstadt continues to fine tune an econometric model that forecasts the market’s next six months.

Back when he was at Value Line, his model had one of the best long-term records in the business. What’s astonishing is that he keeps improving it. What’s even more astonishing is that Mr. Eisenstadt has a record of success no matter where the market happens to be….Just last week he said his model calls for an 18-per-cent rise over the next six months.

Before you rush out to buy, some caution is in order. He doesn’t reveal the components of his model, so it’s difficult to know what’s driving his view.

Even if Mr. Eisenstadt is right, this 18-per-cent rise could be composed of a 10-per-cent decline followed by a 30-per-cent rise, or even a 20-per-cent plunge that gives way to a 40-per-cent surge. (Yikes.)

Or we might have a rough quarter, in which the market’s overall level doesn’t change much from month to month, but swings up and down by huge amounts daily (much as it has done recently, only worse – double yikes). This would spook everyone into selling, so as to provide a base for the subsequent rise.

No matter how we get there, though, Mr. Eisenstadt’s model buttresses my belief that the world isn’t ending, and that falling oil prices should provide a solid foundation for better times.

There is, of course, always the chance of a war, an act of terror or a natural disaster. But if some truly scary event causes everyone to conclude the world is ending, the wise investor simply buys a few more stocks just in case the world sticks around – because it usually does.Read More:

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