Wednesday 30 June 2010

SELF FULFILLING PROPHECIES - And other sheep based tomfoolery

The financial houses use complex mathematical models in a vain attempt to predict the direction of the markets.

These models spew out huge data streams and occasional fixed numbers known to economists as technical levels.

The markets get very excitable when these technical levels are approached, so much so that they buy or sell as these setpoints are neared.

The problem here is, when a significant basement technical level like S&P at 1040 is approached the sheep and the virtual sheep sell, sell, sell. The fear that ensues causes them to sell further as though this number signals the end of the world.

Recently a number of these technical levels have been skirted with and it is only a matter of time until the panic will develop to such a degree that the machines will set a new base technical level. The new level is arrived at by looking further back in 'data time' on the assumption that we have been here before so what happened next in the past is likely to happen again in the future - WRONG!

Unfortunately the algorithms, differential equations, fibonacci projects etc are about as sophisticated horoscope birth chart analysis. You only beleive or act on the bits you want to beleive in. The mathematics of economics is just plain flawed.

The closest real world phenomenon that could be compared to market sentiment and future gazing is Brownian Motion.

Sadly, brownian motion really is impossible to predict.

Trouble is, when the sheep wake up and realise this, they will all sell everything.

Should be fun watching though.

Tuesday 15 June 2010

KILLING THE FUTURE - What future ?

Old moneyists and post war families planned their financial affairs both for themselves and the future generations of their families.

This model was similarly adopted by politicians. The thinking was long term.

The babyboomers reduced their depth of field and focussed their efforts on the next generation and only the next generation. Their rallying cry was ' We're doing it for the kids'.

Their offspring focussed on themselves and everyone was living in the moment - Punks, hippies, yuppies. Various shades of exactly the same philosophical colour.

The current generation is borrowing everything from the future in order to slake their insatiable appetite for useless shit today. This version of non-planning applies personally, locally, nationally and globally.

Where next? There is only one place beyond the future. The End !!