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Posts Tagged ‘predictions’

The Perils of Prediction

The Perils of Prediction 

Courtesy of Charles Hugh Smith, Of Two Minds 

Fortune teller wheel

Nobody knows the future, so the best we can do is strive for an open mind and flexibility in our thinking and responses. 

In 1904, the "fact-based" consensus was that rising prosperity would stretch into the future as far as imagination allowed. The prosperity was so widespread that war, it seemed, had been abolished as bad for business.

In 1904, Imperial Tsarist Russia, though suffering from the usual spot of bother now and again, was stable and enduring. In 1904, Great Britain viewed France as its continental rival.

Ten years later, advanced, peaceful, hopeful Europe stumbled into the Great War, and three years into that war Tsarist Russia fell to revolution.

In 1928, permanent prosperity was again the consensus. Two years later, that hope was reduced to ashes.

In 1930, Germany and Japan were economically troubled, as were the other great nations of the world, but neither were seen as threatening. Less than ten years later, the two nations had declared war on the world.

In 1980, fear of a sudden massive Soviet tank attack on West Germany sparked a series of "what if" books and a push for short-range nuclear-armed missiles in Germany--a U.S. plan which galvanized the Western European peace movement.

Ten years later, the Soviet Empire had crumbled into dust and abandoned gulags.

In 1975, scholars and pundits confidently declared that the "cult of Mao" which fueled China’s Culutral Revolution was so entrenched, so pervasive and so central to China’s Communist regime that would outlast Mao the mortal and thus into the next century.

Three years later, Mao was dead and the Gang of Four lost power. Ten years after 1975, when the Cult of Mao was universally viewed as a permanent feature of China, that nation was four years into the state-controlled, limited-capitalist model of engaging the world that created its present-day pre-eminence.

I think you see my point: consensus predictions of what the future holds are generally wrong. The consensus in the U.S. about the world of 2020 is that it won’t be much different from the world of 2010. All the actuarial tables of Social Security run to 2040 and beyond, as if the road ahead will be an extension of the past sixty years of American global dominance and credit-based prosperity.

That alone tells me 2020 will…
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How your brain remembers the future

Déjà vu, all over again.

How your brain remembers the future

Image Of Thinking Man's Brain Through Bowler Hat

By NewScientist

IT’S like remembering the future. Our brain generates predictions of likely visual inputs so it can focus on dealing with the unexpected.

Predictable sights trigger less brain activity than unfamiliar stimuli, bolstering the view that the brain is not merely reactive, but generates predictions based on the recent past. "The brain expects to see things and really just wants to confirm it now and again," says Lars Muckli at the University of Glasgow, UK.

[...]

The finding supports the "Bayesian brain" theory, which sees the brain as making predictions about the world which it updates when new information comes in.


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Few Called Market Turn, Fewer Predict It Will Last

H/t to Pragcap.

Few Called Market Turn, Fewer Predict It Will Last

market turn, time.comBy AP / TIM PARADIS, courtesy of TIME

(NEW YORK) — Few analysts forecast this year’s remarkable stock market rebound as major indexes were plunging to 12-year lows last March. Now, with most experts predicting the pace of stocks’ gains will slow in 2010, there’s reason to believe they will be proven correct.

Stocks began the dramatic turnaround in March after Citigroup Inc. and other big banks said they were making money again, and then climbed at a fairly steady pace as signs of an economic recovery from the Great Recession became more pronounced.

Investor fears about a potential financial system collapse played a big role in the early year slump in stocks. Once it was clear that wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8 percent from its early March low, the biggest move since the Depression. For the full year, the index rose 23.5 percent, its best showing since 2003.

But sustaining that momentum in the new year likely would require a big drop in the unemployment rate and strong corporate profit gains, along with stable borrowing costs--a combination few analysts are forecasting.

"The easy money has been made already," said Bill Stone, chief investment strategist for PNC Wealth Management. "You’re not going to see another 65 percent move in the next nine months."

In the last day of the year, more signs of healing first pleased investors, then had them concerned about the economy’s ability to thrive without government help. Light trading volume exaggerated the market’s moves, sending the Dow Jones industrial average down 120.46, or 1.1 percent, to 10,428.05.

The year’s stats tell an incredible story across the financial markets:…

Stock market gains often come months before economic recoveries are confirmed. That’s because investors tend to bet on how they think business conditions will be six to nine months in the future. In downturns during the past 60 years, the S&P 500 index hit its bottom an average of four months before a recession ended and about nine months before unemployment reached its peak…

Ron Kiddoo, chief investment officer at Cozad Asset Management in Champaign, Ill., said the market can continue its rally through 2010 only if investors see that companies are again hiring, bringing the unemployment rate down for its present 10…
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GOLDMAN SACHS 2010 INVESTMENT OUTLOOK – THE BULL WILL CONTINUE

GOLDMAN SACHS 2010 INVESTMENT OUTLOOK – THE BULL WILL CONTINUE

Courtesy of The Pragmatic Capitalist

Fortune's Andy Serwer Interviews Goldman Sachs' Lloyd Blankfein

The rally is going to continue into 2010 according to Wall Street’s most influential bank   (Please see here for Goldman’s top 10 trades of 2010). Analysts at Goldman Sachs Europe and America have released their full year 2010 estimates and they are very bullish about the upcoming year.

Goldman sees very low rates, stronger than expected earnings, strong commodity demand and investor reallocation driving prices higher.  Goldman sees no rate changes through 2011 – one of the most accommodative outlooks of any bank we have covered.  Stronger than expected revenue growth and continued margin expansion will result in 15%+ equity returns in the upcoming year.  Although they see a continuation in the rally some moderation is expected.  As we previously mentioned, their analysts expect many similarities to 2004.  David Kostin wrote:

“Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P 500 towards 1,300.”

Their analysts in Europe are even more bullish.  They see the DJ STOXX 600 rising 20% to 300 by the end of 2010.

Goldman argues that we are transitioning into the growth phase of the recovery from the hope phase.  This period is generally characterized by stabilization in economic growth and lower equity returns than the hope phase.  Nonetheless, doubt remains and catalysts for higher stock prices remain.

gs21 GOLDMAN SACHS 2010 INVESTMENT OUTLOOK   THE BULL WILL CONTINUE

Perhaps most important, Goldman sees a continued influx of cash to the equity markets.  Thus far, investors have been risk averse and either remain in cash or have moved into bonds.  Goldman sees a substantial move into equities as investors become less risk averse.

cash GOLDMAN SACHS 2010 INVESTMENT OUTLOOK   THE BULL WILL CONTINUE

How to play it?  Thematically they focus on three key themes:

  • Dispersion – higher growth and higher sustainable returns companies.
  • BRICs exposure.
  • High and growing dividend growth companies.

* You can find Goldman’s 2010 commodity predictions here.

Source: GS

 


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Mid-Year 2009 Checkup

Here’s Karl Denninger’s mid-year review of his new year predictions, and thoughts on 2009 part 2.

market predictionsMid-Year 2009 Checkup

Courtesy of Karl at The Market Ticker


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Sabrient

Sector Detector: Bulls leverage hopeful news to launch a tepid breakout attempt

Courtesy of Sabrient Systems and Gradient Analytics

Stocks were able to leverage some optimistic news and dovish words from the Fed to take another stab at an upside breakout attempt last week. Although readers have sometimes accused me of being a permabull, I am really a realist, and the reality is that the slogans like “The trend is your friend” and “Don’t fight the Fed” are truisms. And they have worked. Nevertheless, I am still not convinced that we have seen the ultimate lows for this pullback, especially given the weak technical condition of small caps.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector ...



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Phil's Favorites

Strange Bedfellows: To Fight ISIS, US Now Supports Iranian Revolutionary Guard, Other Terror Groups

Courtesy of Mish.

Strange Bedfellows

US Mideast relationships get stranger every day. The US has come to the defense or has given aid to three rather unlikely groups in the past few weeks.

  1. Iranian Revolutionary Guard
  2. Kurdish Workers Party (PKK), which directly supports the YPG, on Washington's list of proscribed terror groups
  3. "Moderates" fighting to overthrow Syrian president Assad. Those moderates just signed a non-agression pact with ISIS

70,000 Kurds Seek Refuge in Turkey

The Guardian reports Kurds Flee into Turkey to Escape Isis Offensive
More than 70,000 Kurds fled from northern Syria into Turkey at the weekend and tens of thousands more are trying to cross...



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OpTrader

Swing trading portfolio - week of September 22nd, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Zero Hedge

Liquidations Continue: Stocks, Dollar Slide, Precious Metals Pounded In Asia Trading

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Markets are very active in the early Asian trading session (following the G-20-'s warnings over excess risk-taking). Precious metal liquidations continue with silver bearing the brunt (back below pre-Lehman levels) and gold down modestly. Stocks from China to US are all down notably too. The USD is weakening as EUR strengthens on the back of ECB comments about the possibility of no more stimulus and chatter that the PBOC may be...



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Chart School

Daily Market Commentary: Higher Volume Selling, and Bearish Engulfing Pattern in Russell 2000 and Semiconductor Index

Courtesy of Declan.

In day when Alibaba took the headlines, it was left to the Russell 2000 and Semiconductor Index to warn of potential change.

The Russell 2000 experienced a large bearish engulfing pattern, although within the boundaries of the declining channel. There was an undercut of the 200-day MA, which will need to be watched on Monday. Shorts could get aggressive with a stop above 1,164 (and/or declining channel line).


The semiconductor index also experienced a bearish engulfing pattern, which doubled as a 'bull trap'.  This is a decent sho...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest issue of Stock World Weekly. Enjoy! Please sign in using your PSW user name and password. (Or take a free trial.)

...

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Option Review

IV Implodes On 4-hour YHOO Options As BABA Commences Trading

Investors are dumping shares in Yahoo, sending the stock down 5.0% to $40.08 after shares in Alibaba made their debut on the floor of the NYSE just before midday. Shares in BABA for their part initially traded up to a high of $99.70, a near 47% increase over the IPO price of $68.00. Typically, one would expect put options that are 5% out of the money with roughly 4-hours left to trade to see waning implied volatility. But, at the start of the trading session and ahead of the first trade for BABA, the Sep 19 ’14 40.0 strike put options were trading with 271% volatility or $0.30 per contract amid uncertainty as to how the start of trading for Alibaba would take shape.

...

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Market Shadows

Selling PVD

Selling PVD

Administradora de Fondos de Pensiones Provida S.A. (PVD) shares will not be trading on the NY Stock Exchange after today. Tomorrow, shares will be harder to sell. Strangely, I wasn't able to find information on the internet, but Paul just sent me a copy of the email he received from Interactive Brokers.

We're selling PVD out of the Virtual Portfolio today at $87.18. 

More details:

From: Interactive Brokers   dated July 18, 2014

Holders of AFP Provida S.A. American Depository Receipts (ADR) are advised that the Company has elected to terminate the Deposit Agreement effective 2014-09-18.

As of the te...



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Promotions

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When you register for the webinar, you’ll also get instant access to following trading videos:

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Digital Currencies

Making Sense of Bitcoin

Making Sense of Bitcoin

By James Black at International Man

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes "money."

The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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