Bokonon translates pool-pah at one point in The Books of Bokonon as "shit storm" and at another point as "wrath of God."
— from Kurt Vonnegut's Cats Cradle, chapter 110.
I think we can agree that the human world is pretty much fucked up. So let's skip the demonstration and get right to the point.
Many humans have not noticed how fucked up their world is, or they have noticed that it's fucked up but they are still playing the games which characterize a fucked up world. Chris Martenson is among the latter. Among the games he plays, and he is certainly not alone, is the "market call" bamboozle.
I think we can all agree that the stock market is overvalued. After all, we are in Year 18 of the Bubble Era (1995-???).
Historical values of the S & P 500 from 1960 until now. The Bubble Era in the stock market begins in 1995.
Now I'll quote from the Daily Ticker's S&P 500 May Fall More Than 40% By Fall: Chris Martenson.
Even though the S&P 500 and Dow Jones Industrial Average are hovering at all-time highs, Chris Martenson, author of PeakProsperity.com and the “Crash Course” Series, is forecasting a major market correction.
Martenson predicts the S&P could fall 40% to 60% to the 600-800 level by this fall. His last major market call was in March 2008, before the financial crisis.
Actually, Martenson (and other permabears like Marc Faber and Gary Shilling and Peter Schiff, etc.) hardly ever let a week go by without making a market call, "major" or not. That's the game.
"I see recessionary signs all over the landscape. In particular, Europe is already in recession [and] Japan is already in recession," he says. "We are looking at global economic slowdown."
As for corporate earnings, a stronger U.S. dollar could bring down profits this year, Martenson believes. Corporate profits currently account for 11% of GDP, which is way outside the norm of 6% of U.S. growth. He's also bearish on the U.S. economy and sees weakness in sectors that have shown improvement like the housing market.
Will the Federal Reserve's $85 billion monthly stimulus program continue to inflate asset prices?
"Fundamentally there always has to be some connection between where markets actually are and their price," Martenson says. He believes the Fed's monetary policy has reached a point of diminishing returns and could result in "a pretty significant" market pullback.
There always has to be some connection... No there doesn't! This is the 18th Year of the Bubble Era. Huge prices swings are normal. Overvalued asset prices (bubbles) and undervalued asset prices (collapses) are normal.
Right now he's telling investors to sell in May and go away — the same advice he gives every year.
"This is not the time to be greedy," Martenson notes.
The same advice he gives every year. Well, I think that says it all.
You will note that I bolded the word could in the text. What a powerful word it is! Take a moment to imagine all the things that could happen by next fall. It's a long list, isn't it? In fact, that list is infinite in length.
Of course, things that could happen by next fall have subjective probabilities, although Martenson does not appear to assign one to the "market call." For example, we might assign a very low probability to a prediction asserting there will be an alien invasion of the Earth sometime before October.
But you never know!
Another wonderful quality of the word could is that it doesn't commit you to anything. There may be a 40 to 60% "correction" in the stock market by the fall or there may not be. That's the game.
And what if Martenson is right? Doesn't that make him some kind of genius or something? Hmmm... Isn't Chris bound to get lucky at some point? After all, Martenson gives the same advice every year, and we're in Year 18 of the Bubble Era.
Back to Bokonon.
And I remembered The Fourteenth Book of Bokonon, which I had read in its entirety the night before. The Fourteenth Book is entitled, "What Can A Thoughtful Man Hope for Mankind on Earth, Given the Experience of the Past Million Years?"
It doesn't take long to read The Fourteenth Book. It consists of one word and a period.
This is it:
Nothing.
You won't find any "market calls" on DOTE.
For you see, sometimes the pool-pah exceeds the power of humans to comment
Thanks to reader "Diogenes" for reminding me about this Vonnegut stuff.
Have a nice weekend.
Yes, market calls are useless. It would have been funny to hear merchants predict the future price of tulip bulbs in 17th century Holland.
Posted by: Ken Barrows | 04/12/2013 at 10:07 AM