That is, since I Love Predicting I'm going to put my self on the line once again by making this whole newsletter have an ILP slant.

Since I personally was only in the Stock Market for the whole of the year 2008 ( albeit at a relatively high percentage of my (albeit paltry) income ) and lost a third of my money and then bailed out last month because I needed the remaining money to pay my water bill and help with xmas expenses (and actually, more importantly, to make sure I have reserve money to bridge the gap when the government makes me pay 80 cents on my "excess???" income dollar for my earning too much (???) money per year earning less than one-tenth of what my representatives in congress take in each year while I draw my "1/3rd-of- what-it- should-be" social security retirement monies) my next predictions are such that they have no real consequence for me. For example, if my predictions are correct and I were to short equities at the next DJIA peak and then cover them at the next, Greenspan bottom (explained below), I'd make a bunch of bucks.

But.

Since I have neither the money (it takes a minimum of $2000 for a margin account which you need to short stocks) nor the guts (my self esteem can't stand loosing at investing but it doesn't seem to bother it much loosing at the horses, consequently I've transferred what little 401K money excess I have left back into my 401H account where I took it from in the first place...I should'ah stuck with the ponies, I have a hell of a lot more fun loosing my money betting on them then I did betting on the stock market ...) anyway, as I was saying

I won't be able to benefit from my own predictions. However, if I am wrong I won't suffer from them either.

That is to say, you will have to take my predictions "with a grain of salt".

That is, I won't suffer from my own predictions if I don't act on them but that doesn't mean I won't suffer the "normal" suffering we all have to endure due to the stupidity of all the BM's in our Government. A Government in which it seems, if stupidity were a commodity, on it both major political parties are desperately trying to corner the market. Though it might turn out that the new President elect (FDR the Second) and his party might outdo H. Paulson and cronies and their party who started this whole cascading scenario as the FDR'ians apparently are committed to continuing it by implementing their liberal-socialistic motto: " ... Governments are smart, markets are stupid ...".

This "motto" of course is the reverse of reality, as all "good" Objectivists know: "Markets are smart, Governments--that is, Central Planners--are stupid (and arrogant)." If arrogant isn't an anti-concept then here is one place it for sure has usage. Central Planners are arrogant because they think they are better qualified to tell me-me!--what is in my selfish-survive-and-thrive interest than am I. Since most, if not all of them are two faced (espousing Altruistic Philosophies in their public phony life while practicing an almost enviable selfishness in their private economic life) and who tell me it is in my self interest to sacrifice my actual interests to this or that animal, this or that bug and/or insect or whatever other non-me thing and/or things they decide to collect sacrifices on. Now I ask you, are you actually going to continue letting t.h.e.m get away with such immoral crimes? Well maybe you will or maybe you won't but for the BM the thing t.h.e.y should know for sure is this: the objectivist Sheriffs are in town and the BM's day's are numbered.

Even though the sheriffs are in town, they haven't yet managed to weed out the criminal element in our Government (an apparently un-limited Government) with all its central planning mentalities and other bad BM features that is still way way way too big for me to do anything about it.

So the moral (still) is, save yourself brother.

And this is all that I expect out of my "predictions".

(Since my earlier prediction didn't completely save me I have to take another point off so that it is:
Reality 1, Gary 0.24 0.23 and for those of you who might be familiar with the equation from my Yes book you'll notice that the inverse, 77%, makes me cross over the line into the danger zone of being an incompetent (in this application case for the formula) investor. Oh well, back to the barn for me.)

So, the question isn't, are we going to experience a 1929's type Great Depression? Rather it is, WHEN are we going to break out of the Great Depression PATTERN we currently ARE in?

Or, are we not going to break out but instead ride the current 8,515 Dow all the way back up to 11,088 and then all the way down to 1,428?

Yes, that's right, my prediction is, in 2009 the DJIA is going to peak at 11,088 and start downward, heading for 1,428 BECAUSE this IS the PATTERN we currently are in.

Here is what the stock market pattern from 1929 and the '30's Great Depression Crash looks like:

[insert pattern here = Chart 1 on left ]

When you put the rounded off DJIA numbers from 1929 and 30's back on the pattern here's what you get:

[insert picture of this = Chart 2 on left]

is because I'd rather be right than rich.

I know this is a false alternative but so far I haven't figured out how to break out of this particular, idiosyncratic, patterned way of my being in the world, even though, I hope to so break out ... some day.

But until and unless ...

Stop. I'm getting off track.

So, as I was saying:

When you evaluate the Chart 2 pattern and normalize it (and file off its edges), here is what you get:

[insert it ... [400/400 = 1.0], etc. [0.5] [0.75 = 0.5 up 50%] and finally [0 .1 which = 10% of starting peak] = Chart 3 on left]

Then, when you put the current day known DJIA numbers on this normalized, crash curve pattern, here is what you get:

[insert this = Chart 4 on left, with the red dot the "you are here" mark as of December 26th, 2008 DJIA close at 8515.55]

We notice that to be on the "pure" curve would have required the Dow bottoming at 7,140 (after dropping from its peak value of 14,279.96 set as an interim day high back in October 11th, 2007) but so far the lowest its seen is 7,392 so we take that number as a given and call the difference between it and the pure bottom guesstimate error and count it as the pattern bottom and then project the next top which per the pattern is 50% higher or, DJIA = 7392 *1.5 = 11,088 to be reached sometime during 2009.

The best guess is, during the first half of 2009 but I'm not sticking my neck out to estimate this because you have too many Government BM's sticking their noses in .... what should be a free market but isn't.

So until and unless ... 1428 here we come?

No, wait. There is one saving grace possibility that could keep the Dow from falling all the way to 1,428 and that is what I call the Greenspan bottom ( I know some would use a swear word here but not me because one of my new year's resolutions is to use fewer and fewer and eventually almost no swear words in my writing) ...

Anyway, as I was frigging saying:

The Greenspan Bottom (which is actually a Top in the real world) is based on two assumptions: what I call, the Greenspan Number is basis for one assumption and the other assumption is that the DJIA value of about 2000 at the end of the year in 1987 was an actual, not very distorted measure of the real value of the equity market as a whole at that time.

The Greenspan Number is the one he quoted in his most recent book where he said it seems as if human beings over the long long haul can at best create and sustain an annual productivity increase of around 3%.

Then by the 'rule of 72, a 3% per year productivity increase driven growth rate--that is, in reality markets grow due to productivity increases, so that the real market valuation today after a sustained optimal productivity gain of 3% per year--doubles the initial real value (DJIA of 2000 in 1987) in (72/3 =) 24 years.

That is, 1987 + 24 = 2011, the year in which the DJIA will bottom out at 4,000 (where it should have grown to) and not overshoot it in a kind of irrational anti- exuberance all the way down to 1,428.

Then, at 4,000 the Dow will start its 3% long haul climb once again.

(Getting back as it were into the 8000 zone in 2011+24=2035, one year before the year that I had predicted (a decade or more ago) would be the year Objectivism, qua influential philosophy, would take over the majority of the American Culture (the year its influence would pass the 51% mark). And none too soon given this alternative, horrible possibility.)

That's pretty much it.

Except to note these possible exception(s):

        1. The Dow can break out of this pattern but until and unless it does we ARE IN Crash Mode.
        2. The time element--BECAUSE of Government BM's--is too hard to predict with any meaningful accuracy, but this makes sense because the (free) stock market shape itself is the shape of "volition possessing perceptual-conceptual rational animals" pursuing their unimpeded-by-others selfish interests (when impeded by others, especially BM's, it throws in "action choices of SM power seekers" which makes it MORE unpredictable, something BM's, qua seekers of power over others, like--for ultimate form of evil BM's use of the unpredictable to control people see Nazi Germany as explained to us by Dr. Peikoff in "The Ominous Parallels").
        3. Signs of break out?
                a) Busting through the 11,000's very assertively and staying above it in the same very assertive way (a normal prediction tolerance of say, plus/minus 5% makes the 11,088 be 11,642 on the top side and 10,533 on the bottom side so a break out to the top side would have to take these numbers into consideration)
                b) DJIA going sideways for a relatively long time, say five years or more at 8000's to 9000's or so.
                c) Alchemists finally solving the problem of how to turn straw into gold (cheaply).
        4. and any other thing THAT BREAKS THE PATTERN IN ANY MEANINGFUL WAY

 
That's it, I'm done and exhausted. If I smoked I'd light one up right now but I don't any longer. In fact I quit in November of 1987 right during that little 33%, almost literally overnight (Von Mises) correction of the DJIA as it recovered back to the 2000 number by years end. (Ludwig von Mises, the great Austrian born laissez-faire economist said that in real free markets, market corrections still occur but when they do they are very rapid, meaning over very quickly, hence "overnight" corrections or what I call, Von Mises corrections. And notice the risky double "reasoning" on my part (risky, because it could be circular): the 1987 market correction was rapid, hence, it must've been a real free market, hence a DJIA of 2000 was a real--not distorted--market valuation.)

Later,
G

Don't get me wrong, I hope the pattern is broken too since I don't want to be standing in no goddamn soup line for my daily bread (and soup).

Of course, I'm optimistic enough to think that even if the Dow follows the pattern down, the Greenspan Bottom will kick in and hold, keeping us all out of the soup line.

here's what the final prediction chart looks like:

[ insert here = Chart 5 on left]

The end.

(or should that be, The beginning ... of the end ... of ? ...of Government BM's? ... )

TBD.

Since the only thing (if you exclude the rare moments in time in which I've turned my Logical Choice™ top 3 ($1 trifecta box) picks--cost $6--into more than a $1,000 payout; therefore up more than 16,500%, if you exclude these then, the only thing) I've ever made money at investing has been in gold. So I recommend you put at least some of your assets into ... horses? ... no no no ... into gold ... gold and silver, put some of your assets in these to protect yourself in the event "irrational anti-exuberance" controls that (maybe) future day.

[ insert picture here of salt & pepper shakers and reader "salting" my words before he/she reads and digests them .... so to speak ... ]

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