Monday, June 30, 2014

Cycles Have Been Vanquished, Buy The Dips

Saw a link to this value investor's blog on twitter:

"a lot of value investors get too caught up in the macro picture, trying to outsmart the market by holding large cash positions, tweeting links to examples of excess in the market, and attempting to call a market top"
As Prechter puts it,
"most of the time, ill-timed optimism is harmless because most of the time, recessions are indeed mild and brief. [...] Small, mild retrenchments occur more frequently than large ones so forecasting errors are only mildly damaging. (p66, CtC)"
I agree with y0ungmoney's recent post - that "value investors" are conditioned to ignore market cycles (something I've mentioned before) and that they are buying some very low quality businesses.

But what if there are cycles? And what if we are near the top of one?

Contemporary art is one of the signs that civilization is decaying, not improving, and therefore a new "all time high" (not really in 2000's purchasing power) is a divergence from fundamentals that needs to be resolved.

See, for example, "Tracey Emin stands by My Bed as it goes on sale for £1.2m". It's being sold by the dealer Charles Saatchi who bought it for £150,000 in 2000.


John said...


So if I make a mess of my room and I scream loud enough that the mess is "art" that makes me an artist?

I have trouble telling if the corrections of 2001-03 and 2007-09 are merely a downwave of supercycle degree (80 year cycle, with our economy being at the end of a 15 - 20 year down wave), or if we are near the start of a 40 to 50 year down wave terminating the grand supercycle of roughly 280 years that began with the 97% crash of 1720 - 1723 followed by 40 more years of downwave, with the 240 year up wave ending in the year 2000.

Yet with the decline, decay and collapse of so many of our cities, Detroit, Buffalo, Cleveland, etc. this looks like something more than just a supercycle. We are in a Grand Supercycle down wave. but unlike the 97% crash of 1723, fiat currency money printing will make this follow R. N Elliot's "principle of alternation" producing an extended flat with 50 years of corrections like the 2001 and 1997 episodes we have just been through.

It is only on the cultural front, with the appearance of "art" like "My Bed" by Tracey Imin that I strongly suspect that this is the beginning of a millennial wave down cycle (Decline of the Roman Empire 275 AD to 475 AD, the crusades and plague 1050 to 1250 AD.) in which all of the delusions of the enlightenment (1720 to the present), human equality, tolerance and individualism, are washed away as a mono ethnic tribe of over a billion Han Chinese are on the ascendant with a quiet eugenics program that would make Hitler blush. While here in America the dream of multiculturalism evaporates as competing tribes and races refuse to support each other and all (including unemployed whites) stop working and apply for welfare following James Baldwin's "the slowdown" as described in his seminal work "The fire next time."

The demise of "Multiculturalism" and "Inclusiveness" happens when competing tribes and races which essentially separate from each other suddenly must contend with a shrinking economic pie.

It is what grand supercycle and millenial wave contractions are all about, and what better symbol of the process than a soiled, unkempt bed along with used condoms, empty vodka bottles and burned cigarets parading as art and commanding a $2,000,000.00 price tag!

James said...

...Chinese are on the ascendant with a quiet eugenics program that would make Hitler blush.

Huh? The one-child policy exempts rural people and non-Chinese minorities, who tend to be less educated. If anything, it's the opposite of a eugenics program.

China's demographic policies are a lot like their economic policies-- they're designed to preserve short-term stability above all else and will have bad long-run consequences.

James said...

A recent comment at CB&F:
"The biggest lesson that I learned in the last few years is to never dismiss anything that's strongly positioned based on valuation concern alone."

There's also this gem from 2007:
Long-only is the new black

theyenguy said...

The Business Cycle is one of investing, and its entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in Fiat Wealth, coming from the exhaustion of the world central banks’ monetary authority, specifically the trade lower in Nation Investment, EFA, coming on the trade lower in the European Financials, EUFN, on June 24, 2014.

A sovereign and a seignior will provide the seigniorage of diktat money in the Eurozone.

The Banker Regime’s seigniorage of fiat money failed on June 24, 2014, as reflected by the trade lower in European Financials, EUFN, coming on the trade lower in the Euro, FXE.

The bond vigilantes, are in control of the Bow of Economic Sovereignty, and in calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49% to 2.52%, have effected an investment coup d etat, destabilizing sovereign authority in the Eurozone; and they will be successful, in calling in progressively and strongly higher.

The current sovereigns, that is the European nation states, with their policies of investment choice and credit liquidity no longer support investment gain, and thus the world passed into Kondratieff Winter, the final phase of the Business Cycle, on June 24, 2014.

The new sovereign, Jean Claude Juncker, and his Seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance, and providing the new seigniorage of diktat money, to establish regional security, stability and sustainability.

John said...

Re Chinese eugenics program see:

The top 10% (by IQ measured by G loaded standardized tests) in China can have more than 1 child. Among the party elite 3 children families are relatively common.

One child policy applies only to the low scoring masses.

CP said...