Ian Gordon and his Dow 1000 forecast

[rogermexico]

Re: Ian Gordon and his Dow 1000 forecast

This request seems to this reader to be a rhetorical jockeying around, more than anything else, and also is essentially absurd.

Well, Camus, I guess I have proved that it is not my tone but something in the content of my posts that is really irritating you. "rhetorical jockeying around"? and "essentially absurd"? Why hurl insults like this?

What is investing other than rank ordering available investment alternatives according to how you think they are likely to perform in the future? Maybe you throw darts. I try to form investment theses, just like most investors. Do you really buy shares, bonds or commodities with no opinion on whether other assets could perform better?

What have you accomplished by gathering his opinion on that?

What I have accomplished is knowing something more useful to me than simply whether we have made a "nominal bottom" in shares.

Even EJ's is highly approximate, so what exactly are you presuming to capture with this request in the way of market intelligence?

Gee, 15% Gold and 85% treasuries sounds pretty specific and concrete to me. As far as I can tell, this recommendation was made after comparing the likely return of these assets to other assets in the investable universe.

Your comments are, quite frankly, more than a little foolish.

Why don't you let Nero defend himself?

[Sharky]

Re: Ian Gordon and his Dow 1000 forecast

I cannot speak for Metalman, but some of us are here because the itulip thesis confirms what we have discovered on our own long before itulip was known to us. EJ has given theoretical structure to own empirical results and less well-formed hypotheses and lemmas.

What a great post. Thanks for articulating that; I feel the same way.

[rogermexico]

Re: Ian Gordon and his Dow 1000 forecast

I was out to test some of my views on a broader audience, and I have certainly done it. I was not here to learn you and other people about investing in detail, or convert anyone to my view,as that is out of my reach to spend that amount of time. I invest through finding companies that are cheap, and my main concern is not the macro picture. That's the timing game, not my game. If you know how to protect your wealth that is good, but if you don't I can't learn it to you, as that is something you will have to devote in the excess of thousands to tens of thousands of hours to learn depending on your learnings curve, it's certainly not learned in under 1000 hours, and it's not something I can learn someone through my posts here, but maybe I could throw some doubt into the mind of someone who have been absolutely sure about the debt deflation scenario with deflation. It's by the way, much easier to buy a company now, that are selling at a cheap valuation compared to what you see as long term earnings, using this market now, as a long term buying opportunity, instead of trying to time the move of what some commodity might do 5 years from now, that's not something I am good at. If this is going to be a further inflationary structural inflationary bear-market, similar to 1975-1980, I would much rather own railroad shares than gold, because it performed as well as gold back then on the way up from the mid seventies, plus that it provided a jump in profits after gold tanked, so not the timing issue you have with gold. Plus all the dividends of course.

Thank you, Nero. That is a thoughtful response. If you have no opinion about other asset classes, that itself is useful (at least to me) in considering the validity of your arguments. Your self-description seems similar to how I started out - as a value-oriented investor and occasionally, trader. For years I never did anything but stocks and cash. If picking companies WEB (Warren Buffet) style and ignoring the macro picture has worked for you, more power to you. That worked very well for me in the past as well.

However, I personally think it is now a very dangerous time to invest that way. I am here on itulip because after years of researching market history and reading more in economics, I began to think something was rotten in denmark. That was how I found itulip. I don't agree with all EJ's political prescriptive measures, but I think his analysis of the macro picture is quite compelling and that is why I pay attention to it.

In short, it is different this time, but in a bad way.

[Fat Hampster]

Re: Ian Gordon and his Dow 1000 forecast

For years I never did anything but stocks and cash. If picking companies WEB (Warren Buffet) style and ignoring the macro picture has worked for you, more power to you. That worked very well for me in the past as well.

However, I personally think it is now a very dangerous time to invest that way.

The great Sir Warren himself learned the hard way.

Warren Buffett Taken Down a Notch Again BusinessWeek

I am here on itulip because after years of researching market history and reading more in economics, I began to think something was rotten in denmark. That was how I found itulip. I don't agree with all EJ's political prescriptive measures, but I think his analysis of the macro picture is quite compelling and that is why I pay attention to it.

Been lurking for years. I also find EJ's macro analysis compelling because it works. An example that stands out for me: Millions of bits were spilled by deflationists like Denninger on Tickerforum.com who argued that the Federal Researve will never, ever monetize debt. He had this colorful rant about the Fed putting a gun to its head and pulling the trigger before it "prints money." Well, we all know how that prediction turned out.

EJ knows how these guys think. I do not get the sense he agrees with the policies, however.

[ThePythonicCow]

Re: Ian Gordon and his Dow 1000 forecast

Been lurking for years. I also find EJ's macro analysis compelling because it works. An example that stands out for me: Millions of bits were spilled by deflationists like Denninger on Tickerforum.com who argued that the Federal Researve will never, ever monetize debt. He had this colorful rant about the Fed putting a gun to its head and pulling the trigger before it "prints money." Well, we all know how that prediction turned out.

EJ may be the better analyst of the two, but Denninger wins hand down in the colorful rant category ;).

[Guest]

Re: Ian Gordon and his Dow 1000 forecast

"rhetorical jockeying around"? and "essentially absurd"? Why hurl insults like this? ... Maybe you throw darts. I try to form investment theses ... What I have accomplished is knowing something more useful to me than simply whether we have made a "nominal bottom" in shares.

Rogermexico -

QUOTE: "please give me a rank ordered list of the following assets and where they will be one year and 5 years from now in terms of real return. S&P 500, GLD, WTI, Copper, Ag Commodities (WHeat, Corn Soy etc) Dollar index. You can throw in some other currencies if you wish."

This is a rhetorical request. As though Nero's replies with specific notional future prices would provide you with some evidence of his plausibility. You propose to examine his estimates, on where tin, copper oil and gold prices will be in five years time, for "accuracy" or "believability"? Meanwhile, he will in fact largely have plucked them out of his hat, as would any of us. To try to identify the prices for any of these assets five years in the future is probably just whimsical. People can only offer opinions. So as answers to this question can't provide anything substantive, the question is therefore indeed a "rhetorical question".

Meanwhile, reposted from above:

What's all this fuss and bother ... ? Lot of people kicking up a stink and squawking here about a guy's call, to which he's committed and which he may turn out very publicly wrong about if all your comments are correct. If you have this supreme assurance in the outcome, you need merely await it to then deliver a sermon on blatant folly.

Wait for the guy to be proved right or wrong in the next year, and then you can lambast and generally roast him to your heart's content afterwards if he was wrong, or ask him how he figured this out if he proves right.

[rogermexico]

Re: Ian Gordon and his Dow 1000 forecast

Rogermexico -

QUOTE: "please give me a rank ordered list of the following assets and where they will be one year and 5 years from now in terms of real return. S&P 500, GLD, WTI, Copper, Ag Commodities (WHeat, Corn Soy etc) Dollar index. You can throw in some other currencies if you wish."

The above is a rhetorical request, posted as though his replies would provide some evidence of plausibility. You propose to examine his replies on where tin, copper oil and gold prices will be in five years time, for "accuracy" or "believability", while he will in fact largely have plucked them out of his hat, as would any of us. To claim to identify precise price points for any of these assets five years out in the future is whimsical more than anything else. No-one can provide those precise price quotes - they can only offer opinions, and this much should be obvious, no? Your question is therefore indeed a "rhetorical question" in the strict sense.

Meanwhile, reposted from above:


Wait for the guy to be proved right or wrong in the next year, and then you can lambast and generally roast him to your heart's content afterwards if he was wrong, or ask him how he figured this out if he proves right.

What? And wait until i have missed the new bull market? Why don't you do the same - wait to see if he is right instead of hurling pejoratives at me. I thought the whole point of the discussion is position ourselves (or not) in equities as they are bound to go up?

You are once again not paying attention. My question, as with all questions, is certainly rhetorical in the literal sense. (Look up the word rhetoric and see what it means). However, Nero and apparently you are already making predictions about the future perfomance of stocks. I am only asking Nero to expand his opinion to their performance relative to other asset classes. You may assert until hell freezes over that I don't really want him to answer. I will respond once again that I do. I don't give shit if you believe me or not.

Also, you are falling prey to the post hoc ergo propter hoc fallacy

You say I could "ask him how he figured this out if he proves right".
If a priori his ideas make no theoretical sense, it would be stupid to attribute his success to his reasoning or his theory. Then I could use hemlines, superbowl results, chicken entrails, or anything else that just happens to randomly correlate with a given result. That is how astrology works. By accident. You would not make a good scientist if you believe the results of a single trial with a weak theoretical foundation.

In fact, you only sound more incoherent the more you respond to my posts.

Go bug metalman for a while.

[nero3]

Re: Ian Gordon and his Dow 1000 forecast

Thank you, Nero. That is a thoughtful response. If you have no opinion about other asset classes, that itself is useful (at least to me) in considering the validity of your arguments. Your self-description seems similar to how I started out - as a value-oriented investor and occasionally, trader. For years I never did anything but stocks and cash. If picking companies WEB (Warren Buffet) style and ignoring the macro picture has worked for you, more power to you. That worked very well for me in the past as well.

In short, it is different this time, but in a bad way.

I think the it's different this time view, is very dangerous, I think it's just as wrong in this situation, as it was during the late 90-s. I see it in the swiss franc, in the yen, in the dollar, in treasuries, in gold. You could see similar moves in the time after 1987, and during 1998, just not on this scale. I don't think it's different this time, but I think it was a very powerful correction, possibly 1987 for emerging market's and commodities, while at the same time, a kind of replay of the 73-74 correction, for the dow jones, or make it 1938. Not just 1987, but also the 1948-1949 on the dow have some resemblance to emerging market's now.

[nero3]

Re: Ian Gordon and his Dow 1000 forecast

I thought the whole point of the discussion is position ourselves (or not) in equities as they are bound to go up?
.

I just wanted to see what response I got. My postings here will now be far less frequent. Had it been very positive, with lot's of less intellectual people agreeing I would had considered a sign I was wrong. It's not my intension to spend the time to convert anyone to my view, and my view is based more on intuition than anything I can explain so that someone else can replicate it to themselves. I might try to explain with facts, but what it boils down to is experience and intuition. To get that same view, they would have to put in the hours themselves. I do think the fear and the risk premiums have gotten out of hand and I don't think this is like 1929.-1930, but if it is, it's not like I will watch my portfolio vaporize, I'm very quick at changing my mind, and I won't stand with my head buried in the sand.

[rogermexico]

Re: Ian Gordon and his Dow 1000 forecast

I think the it's different this time view, is very dangerous, I think it's just as wrong in this situation, as it was during the late 90-s. I see it in the swiss franc, in the yen, in the dollar, in treasuries, in gold. You could see similar moves in the time after 1987, and during 1998, just not on this scale. I don't think it's different this time, but I think it was a very powerful correction, possibly 1987 for emerging market's and commodities, while at the same time, a kind of replay of the 73-74 correction, for the dow jones, or make it 1938. Not just 1987, but also the 1948-1949 on the dow have some resemblance to emerging market's now.

The itulip thesis is indeed that it really is different this time. This is not a typical recession nor is it a typical market correction. Public and Private debt as % of GDP, projected fiscal deficits a % of GDP, fraction of corporate profits accounted for by financial firms, etc., etc., - they are all different this time.

"It's different this time", of course, refers to what the bullhorn crowd says in response to skepticism about the latest bubble and why it will not pop. I am using it in a ironic sense (that you might have missed) that implies the opposite of the usual bullishness.

[nero3]

Re: Ian Gordon and his Dow 1000 forecast

The itulip thesis is indeed that it really is different this time. This is not a typical recession nor is it a typical market correction. Public and Private debt as % of GDP, projected fiscal deficits a % of GDP, fraction of corporate profits accounted for by financial firms, etc., etc., - they are all different this time.

"It's different this time", of course, refers to what the bullhorn crowd says in response to skepticism about the latest bubble and why it will not pop. I am using it in a ironic sense (that you might have missed) that implies the opposite of the usual bullishness.

Why should it's different this time, be any less dangerous to use this time on the bear side than on the bull side?

It seems some bears I talk with think we are entering into some kind of permanent decline, and multi year depression, accompanied by deflation. That's the it's different this time argument taken a bit far. But I'm just as skeptical when bears use it as when bulls use it. So far the money supply in the US have not went down. Money is pumped like never before. Yields could break to the upside, and the US could break out of the spiral and into stagflation, soros have predicted the debt to GDP to reach 500 %. Maybe it's that, with stagflation, not the debt deflation scenario that will play out.

[Chomsky]

Re: Ian Gordon and his Dow 1000 forecast

Why should it's different this time, be any less dangerous to use this time on the bear side than on the bull side?

It seems some bears I talk with think we are entering into some kind of permanent decline, and multi year depression, accompanied by deflation. That's the it's different this time argument taken a bit far. But I'm just as skeptical when bears use it as when bulls use it. So far the money supply in the US have not went down. Money is pumped like never before. Yields could break to the upside, and the US could break out of the spiral and into stagflation, soros have predicted the debt to GDP to reach 500 %. Maybe it's that, with stagflation, not the debt deflation scenario that will play out.

I'm telling you man, you are barking up the wrong tree here! Or preaching to the choir, but in the wrong key, I can't tell.

The Truth About Deflation

[rogermexico]

Re: Ian Gordon and his Dow 1000 forecast

It seems some bears I talk with think we are entering into some kind of permanent decline, and multi year depression, accompanied by deflation.

With the important caveat that the deflation is a debt deflation, likely to be achieved through inflation via policy or accident, that is exactly the itulip thesis.

I do get the sense that you may not have even read any of the itulip posts re: the substance of the thesis.

[xela]

Re: Ian Gordon and his Dow 1000 forecast

a snarky post

I..object..the..implied..lack..of..humour.

It's just your calls, within the timeframe you gave, taste like.. lasagne with fish instead of meat!? (insert snarky snort here)

[nero3]

Re: Ian Gordon and his Dow 1000 forecast

With the important caveat that the deflation is a debt deflation, likely to be achieved through inflation via policy or accident, that is exactly the itulip thesis.

I do get the sense that you may not have even read any of the itulip posts re: the substance of the thesis.

In my opinion. If debt to GDP rise, like in the late half of the seventies, to let's say a higher level compared to GDP as compared to today. That's not debt deflation. If debt to GDP goes down, similar to the 1930-40-s, that's debt deflation. When there is the comparisons to Japan in 89, and debt deflation first bounce call, then that's a call for debt deflation and this to be a bear market rally, similar to the nikkei was then. That might be the case if the dow is headed lower, like dow 4000. But it might be the case, that dow is destined for a dow 11-12000 in the 2000-2016 era similar to dow 1000 in the 1965-1982, while debt to GDP at the same time rises, companied with stagflation. That's not debt deflation.