Down goes the Dow

I believe you are only looking at where you have been and offers zero insight into the future. You will see soon enough. Here is the link to Hussman that you requested.http://www.hussmanfunds.com/wmc/wmc160912.htmIgy

There's nothing in there to explain the purpose of that "ratio of ratios" that is in his formula. Since this is the formula that you prefer, I assume you understand the reasoning for using that ratio. Please enlighten me. Thanks.

All the information you need is in the article and well documented. But since you want more here you go:http://www.hussmanfunds.com/wmc/wmc151130.htmWhile your at it, please explain your view that the last 20 years average equity performance would be the anywhere close to the next five years? I could care less about other time frames.Igy

Marty B. wrote:

Ghost of Igloi wrote:

I believe you are only looking at where you have been and offers zero insight into the future. You will see soon enough. Here is the link to Hussman that you requested.

http://www.hussmanfunds.com/wmc/wmc160912.htm

Igy

There's nothing in there to explain the purpose of that "ratio of ratios" that is in his formula. Since this is the formula that you prefer, I assume you understand the reasoning for using that ratio. Please enlighten me. Thanks.

I'll tell you what. Since you seem to think the answer to my question is in that article, but I don't see it, let's stop wasting both of our time and why don't you just quote the part that explains the purpose of that particular ratio in his formula. If you can't do that, I'll assume it's not there.

How come you avoid my question which is more relevant and the focus of the original discussion? The formula and logic you apply to future returns is simplistic and naive. I will assume you can't even understand how 20 years of Dow Jones Industrial Average returns says absolutely nothing about the next five years. In regards to John Hussman, I would never attempt to explain that which is clearly explained and documented in his own research. If you have serious questions concerning his methodology I would suggest you reach out to the author via Twitter.

Marty B. wrote:

I'll tell you what. Since you seem to think the answer to my question is in that article, but I don't see it, let's stop wasting both of our time and why don't you just quote the part that explains the purpose of that particular ratio in his formula. If you can't do that, I'll assume it's not there.

Marty,

How accurate is your formula when you use the twenty year 1930-1950? Did that formula have any relevance to the time period of 1996-2016? Or for that matter, does your data set have any relevance to predicting the future? Yes, but not what you think, probably a better modeling to the time period 1930-1950. I understand, that is not what you wanted to hear.

Igy

Marty,Here is your formula, run it with 1930-1950 Dow data and give us a 20 year projected Dow high.

Marty B. wrote:

Jeffy Tull wrote:

How's that? No chance the Dow will drop below 13,000? Can you provide the math and the assumptions that match is based on to reach this conclusion?

Or are you just lashing out in your frustration at your inability to verbalize these feelings you have when you read comments that do not adhere to your "worldview" that the hucksters have sold you on?

Given the shape of the curve modeling the DJIA over the last several decades, it makes sense to use an exponential growth model for predictive purposes. Plug the year in for x to get the DJIA value.

y = (2 × 10^(-101))e^(0.1206x)

U.S. stocks on Friday were on track to rise at the open, bolstered by J.P. Morgan's better-than-expected earnings, but they still held the potential to end lower for the week.

Earnings for three big U.S. banks are hitting ahead of the bell, along with a reading on retail sales. A midday speech by Federal Reserve chief Janet Yellen also will get attention.

S&P 500 futures rose 10.20 points, or 0.5%, to 2,136.50, while Dow Jones Industrial Average futures tacked on 91 points, or 0.5%, to 18,112. Nasdaq-100 futures gained 21.25 points, or 0.4%, to 4,817.25

On Thursday, the S&P 500 and Dow both closed 0.3% lower after paring bigger intraday losses, as analysts blamed the selling on worries about the Federal Reserve's latest meeting minutes and weak Chinese economic data. The S&P 500 is on track for a weekly drop of 1% as of Thursday's close, while the Dow is off 0.8%.

Other markets: Oil futures traded higher Friday following encouraging inventory data, helping sentiment. European stocks shot up, while Asian markets mostly closed with gains. Gold futures pulled back, and a key dollar index advanced.

Economic news: A September report on retail sales is slated to hit at 8:30 a.m. Eastern Time, with economists polled by MarketWatch forecasting growth of 0.7%.

At that same time, a reading on producer prices is due to arrive, and economists expect a gain of 0.2% for last month.

At 10 a.m., investors will digest a report on consumer sentiment, with an October reading of 91.7 expected. Figures for August business inventories are also due at 10 a.m.

On the Fed front, Boston Fed President Eric Rosengren is due to make opening remarks at 8:30 a.m. Eastern at a Boston Fed conference on the "elusive" great recovery.

Yellen's speech at that same conference will cover "macroeconomic research after the crisis," and it's slated to be delivered at 12:30 p.m. Eastern.

Citi, JP Morgan Chase, and Wells Fargo have all reported this morning and all three beat expectations! Winners are dominating losers this earnings season.

Earnie wrote:

Citi, JP Morgan Chase, and Wells Fargo have all reported this morning and all three beat expectations! Winners are dominating losers this earnings season.

Let's see how correct Earnie is:

3Q Year Revenue EPS

JPM 2015 $23.5 Billion $1.68

2016 $25.5 Billion $1.58

C 2015 $18.7 Billion $1.35

2016 $17.8 Billion $1.24

WFC 2015 $21.9 Billion $1.05

2016 $22.3 Billion $1.03

Clearly what Earnie sees in EPS is simply companies guiding the Street to a lower hurdle rate. Bottom line, across the board, each company had lower GAAP EPS than one year ago.

Igy

Marty B. wrote:

Perhaps you can enlighten us as to the purpose of the GDP ratio in Hussman's formula. I'd love to hear the explanation for including that.

Ghost of Igloi wrote:

I believe you are only looking at where you have been and offers zero insight into the future. You will see soon enough. Here is the link to Hussman that you requested.

http://www.hussmanfunds.com/wmc/wmc160912.htm

Igy

Marty B. wrote:

There's nothing in there to explain the purpose of that "ratio of ratios" that is in his formula. Since this is the formula that you prefer, I assume you understand the reasoning for using that ratio. Please enlighten me. Thanks.

Ghost of Igloi wrote:

All the information you need is in the article and well documented. But since you want more here you go:...

Igy

Your efforts at avoiding the question obviously means you cannot answer it. To be honest, I asked the question knowing that was the case. It's a nonsense formula. I just wanted to see how you would react.

Hussman clearly believes that most of his readers either lack the mathematical chops to dissect his "formula", or do not wish to expend the time and effort vetting his process. He is counting on you to accept what he says as fact without question. And fanboys like you swallow it hook, line, and sinker.

Unlike Hussman, I provided a formula and explained its genesis and rationale. The validity of this formula is certainly open to honest debate. Hussman's "formula", on the other hand, must be immediately dismissed for its lack of pertinent foundation and questionable calculations. It is voodoo mathematics.

Marty,As I thought, you have no clue. Perhaps you can argue with Warren Buffet as to why he uses GDP in what is often referred to as the Buffet Indicator. I can send you more if you like so you "can learn yourself up."Igyhttp://www.forbes.com/sites/chuckjones/2016/06/21/warren-buffetts-gdp-to-market-cap-ratio-signaling-low-returns/#4c0516825c21

Marty B. wrote:

[Perhaps you can enlighten us as to the purpose of the GDP ratio in Hussman's formula. I'd love to hear the explanation for including that.

"Your efforts at avoiding the question obviously means you cannot answer it. To be honest, I asked the question knowing that was the case. It's a nonsense formula. I just wanted to see how you would react.

Hussman clearly believes that most of his readers either lack the mathematical chops to dissect his "formula", or do not wish to expend the time and effort vetting his process. He is counting on you to accept what he says as fact without question. And fanboys like you swallow it hook, line, and sinker.

Unlike Hussman, I provided a formula and explained its genesis and rationale. The validity of this formula is certainly open to honest debate. Hussman's "formula", on the other hand, must be immediately dismissed for its lack of pertinent foundation and questionable calculations. It is voodoo mathematics."

Marty,

Here is some reading material for the weekend. This article "Quicksilver Markets" is from the Office of Financial Research in the Department of Treasury. Fan boys of valuation metrics and Dr. Hussman can clearly point out that the domestic stock market has struggled since it's publication.

https://www.financialresearch.gov/briefs/files/OFRbr-2015-02-quicksilver-markets.pdf

Learn yourself up.

Igy

Marty,

In case you want to continue to portray your view without an equal representation of the facts. From the OFR report concerning the Buffet Indicator:

"Buffett Indicator. The ratio of corporate market value to gross national product (GNP) is at its highest level since 2000 and approaching the two-sigma threshold (see Figure 5).8 This indicator is informally referred to as the Buffett Indicator, because it is reportedly Berkshire Hathaway Chairman Warren Buffett’s preferred measure to assess overall market valuation.9 Historically, this indicator’s message is consistent with CAPE, particularly in identifying periods of extreme valuation before the Great Recession and the 1990s technology stock bubble."

Igy

Marty,

From John Hussman:

"In every period of speculation, investors begin to abandon historically reliable measures on the grounds that the world has changed in some way that makes these measures invalid. The main charge against market capitalization/GDP, for example, is that gross domestic product includes the income of foreign companies generated here in the U.S., and excludes the income of U.S. companies generated abroad. For that reason, some have argued that gross national product (GNP) should be used as the denominator (which counts the income of the nation, wherever it is produced). As it happens, because the various income components offset nearly identically, there’s virtually no difference at all in using one versus the other (GDP is currently $17.7 trillion, while GNP is $17.9 trillion). Unfortunately, taking the ratio of U.S. market capitalization to global GDP would be a wholly apples-to-oranges calculation, while global market cap to global GDP would say little specific about U.S. valuations. "

Igy

Your continued evasion is no surprise. Typical fanboy behavior. And it's ironic that you suggest I "learn up" when you cannot even explain one factor in Hussman's "formula" to which you subscribe. Take the blinders off before it's too late.

Marty,

I'll be a fan boy, preferred to fool boy. Anyway, why don't you calculate your formula using 1930-1950 data, then project your Dow return? It just shows how easily I debunked your rather foolish model.

That is the issue.

Igy

By Amey Stone

With input from September retail sales, the Atlanta Fed’s real-time gross domestic product tracker, GDPNow, fell below 2% for the first time. The estimate is now at 1.9%. Just a month ago, it was above 3%.

The Atlanta Fed’s economists explain:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 1.9 percent on October 14, down from 2.1 percent on October 7. The forecast of third-quarter real personal consumption expenditures growth fell from 2.9 percent to 2.6 percent after this morning’s retail sales report from the U.S. Census Bureau.

It’s common for GDP estimates to fall throughout the quarter. The GDPNow estimate for Q3 is still higher than the government’s last second quarter growth estimate of 1.4% and the final reading of 1.1% for the first quarter.

But hopes that the third quarter would show a strong acceleration in economic growth are fading.

Ghost of Igloi wrote:

Marty,

I'll be a fan boy, preferred to fool boy. Anyway, why don't you calculate your formula using 1930-1950 data, then project your Dow return? It just shows how easily I debunked your rather foolish model.

That is the issue.

Igy

My goodness, you sure are working overtime to distract from your inability to explain Hussman's formula. Look, I get it, you trust Hussman unequivocally. You accept whatever he says without question. Fine. But it seems like being a Hussman fanboy isn't much different than being a Trump fanboy. Unfortunately both groups have issues, in my opinion.

As for doing the calculation you asked for, I'll leave that to you. But it will be meaningless since the model is based on a much larger time frame though not the entire history of the Dow.

Okay that's enough rational talk. Now back to GOI's diversions. :)