“U.S. antitrust prosecutors sent 15 executives from four companies to jail for price fixing of memory chips. There was a rub: The collusion failed.”, this was the article carried by Bloomberg Markets in it’s Jun 2008 issue. This is not the first time executives have gone to jail. We highlighted the Jamie Oli case on […]
The first person I heard keeping a track of DOW on a day to day basis was a business school senior of mine from the class of 1997. Little did I know then that in barely ten years, the world will get glued to DOW daily and intraday movements. And nothing will matter more than where the Dow was headed. We are in the age of DOW, and DOW psychology rules. The grip is so powerful that an emerging market broker in Romania after a market update to his client starts talking about what the client is interested in most, the bailout meeting. The respective client will be missing the UEFA CHAMPIONSHIP match between CFR CLUJ and CHELSEA to watch the bailout meeting at home.
We have an index of phone calls at Orpheus. This is an internal sentiment index that we use. The more the calls we receive in a certain week, the stronger the market sentiment. The week that went started with frantic calls regarding the market volatility. “I am long on the market after markets fell 10%, but they don’t seem to stop falling, and now DOW is down too, what should I do?” Another query was, “When will this fall stop. How low can it go?” Another one involved Fannie Mae, Freddie Mac, and Merrill. “What was their future?” Another was regarding short selling ban and how will it modify market behavior? “What else will the regulator do? Open interest has increased in the market, what does it mean? I am still in doubt regarding the bottom. Does doubt about a bottom make it a better bottom?” Of course once in a while we also have the regular confessions regarding leverage and need for vacations and detachment. Markets do take a toll on human psyche and more the emotional maturity better it gets for the investor, trader or speculator.
If WHEAT is down 34% (back to 2007 levels), SUGAR is down 28% (sub 2005 levels), COCOA is down 20% (back to 2003 highs), COTTON is falling since 1995 and is down 87%, CORN is down 34% (back to 2007 levels) and even COFFEE which we gave a positive upturn reco in MAR 2007 (after […]
In conclusion, inflation is another accident the business cycle is about to face for more than a few years. How we prepare for it and thrive needs effort and more than a short term approach. As if the last time we witnessed it on a similar degree was in 1857, then we are already too much in the past to relate to it. A classic problem of econohistory, how can it hit me when it happened so long ago?
“The fundamental business of this country is on a sound and prosperous basis,” President Hoover, in October 1929. “The economic fundamentals of this country remain sound”, Ronald Reagan, in October 1987 are clear historical precedence regarding the worthless of news, as Ralph N Elliott pointed out in 1930’s. October connects us like nothing else. Elliott also mentions about the French economist Pigou in his market letters, published by the New Classic Library. Pigou discussed at length psychological errors and their relation to booms and depression. He maintained that an error of optimism tends to create, throughout the community, a certain measure of psychological interdependence until it leads to a crisis. Then the error of optimism dies and gives birth to error of pessimism. We are nearing October 2008. If this looks like just another calendar date, think again.
So the question one should ask is how terrible is this inflation? And does inflation lead commodities or vice versa. If it is a commodity linked inflation, a pause in commodity will also see a pause in inflation for a few months while the long term cycles exert themselves. The equity v/s gold cycles for Nikkei, Dow and Sensex also suggest that we are heading for seasonally positive time for equities compared to Gold. This means that a multi month pause in equity market fall, a bear market rally beginning from cycle lows in October 2008 might be in. We mentioned about the late economic cycle and how it is linked to the 41 month Kitchen cycle. Sensex fall for the last 8 months also pushes us towards completion of the first leg down in the late economic cycle. Every cycle has three legs and the current late economic cycle should complete sometime in 2011-2012.
– CORPORATE HISTORY – Authors – David A. Vise and Mark Malseed. Google holds an insurmountable reputation in the search engine industry. Google is an American firm based out of Mountain View in California. Google’s founders are two intellectuals of Stanford University who started up this project in January 1996.Their mission to organize world’s information. […]
Valuation, though a subjective matter, has many elements of objectivity. In the year 1934 Benjamin Graham and David L. Dodd published their book on Security Analysis that was precursor to many work in this field of finance. This was followed by ‘The Theory of Investment Value’ in the year 1938 by John Burr Williams. While […]
Divergences are also an extension of the Dow Theory rule of non confirmation between indices. DOW Theory looks for non confirmation between two indices. While divergence looks for non confirmation between price and its RSI. Unlike failure swings, divergences are a bit loosely defined. There are simple and complex divergences. There are also divergence failures […]