It is a quite day on the market and a quite rainy day in general where I live so I thought I would dust off my electronic quill and finish this article I have been working on for a while now.
My formal education was technical and as such I approach my trading (such as it is) from a very technical perspective. I have read numerous long term forecasts for the market. I remember reading one article that claimed we are now in wave four of an Eliot wave pattern that is centuries old. Thus this correction will be even more severe than the great depression of the 1930s. I have read other articles where the analyst sees a double top in the S&P500 over the last ten years. Since we have broken the neckline, that projects down to about a value of 200 for the index as some point.
These are all very dire predictions for how bad things will get and where we are headed and quite frankly it is scary indeed. Not to fear though these are just silly lines on a chart right? After all, our political leaders have everything under control and once they have finished printing their way to wealth I am sure that the world will be alright again. If you read the news it seems everything is just getting better and better all the time now. There are green shoots all over the place as far as the eye can see! (read: sarcasm!)
I don’t claim to be smart enough to know whether this is true or not. I will tell you that personally I believe charts which only describe the honesty of time and price, more then I trust anybody’s opinion. Beyond trading though I wanted to offer up some thoughts in a general sense on where I think we are headed.
First when an economic recovery takes hold it will have nothing to do with anything that government is currently doing. In fact, the policies to date will hinder that recovery as their primary goal is wealth preservation of the mega rich and do not address wealth creation. A new economic expansion must come as the result of new industry and new industry will come about as a result of innovation.
So what will drive this new era of prosperity when it shows up? I have an idea and I will share it, although this may lead some to question if I am serious or not, but first let us take a look backwards. The last century or so has seen changes in our world that would seem like magic to those who lived before this time. They have been quantum leaps forward. These changes, when they came moved us forward in some way by orders of magnitude. When the industrial revolution came it allowed us to make orders of magnitude more replicas of goods then we ever could before. Increases in manufacturing lead to all kinds of innovations like air travel. Air travel allowed us freedom of movement orders of magnitude faster than anyone ever had before. Imagine telling someone in the 1870s that within one hundred years you could start from any major city in the world and within 48 hours be in any other major city in the world and that this would be possible to ordinary citizens, not just a privileged few! It would have been almost impossible for them to believe or understand.
Our industry and manufacturing lead us to the ability to make things orders of magnitude smaller then we had ever done before, and this lead to the semiconductor industry. Integrated circuits lead to personal computers and the ability to process information on a scale orders of magnitude larger then every before. Semiconductors also lead to the internet and information age. We now have access to orders of magnitude more information for orders of magnitude less cost than ever before. Imagine telling someone from the 1950s that within fifty years you could get information from anywhere to anywhere else instantaneously and almost for free! I would never have been able to share this blog post with you even twenty years ago, the technology just didn’t exist.
So what is next? My guess is the next leap will be with energy. Within fifty years I believe people will have access to orders of magnitude more energy at a tiny fraction of the cost they do today. After all energy is the most abundant thing in the universe. In fact the only thing the universe has more of is space! We are virtually starving surrounded by abundance. Oil was an easy source of energy. At the start it was just laying on the ground. A pre packaged source of energy stored in chemical form that the world just gave us. Now we are going to have to be smarter though.
Oil is heavy. We need to get smarter about the way we store energy. In the future I can imagine a device that fits in the palm of your hand, weighs less than a pound and contains more energy than a tank of gas: a portable power cell that allows us to carry energy with us just like we carry information today in the form of portable communications devices. The key to Tony Stark’s Iron Man was the power source. Why can’t we all have personal flying machines? Two reasons: the energy is too expensive and it is too heavy!
So how do we generate the energy in the future to begin with? Nuclear! I do not believe that the current fascination with windmills and solar panels will last. I believe that with the invention of nuclear fusion reactors that produce electric power cleanly will see the end to all this supposed “green energy” technology.
So if I were in charge which I am not I would take all that money that has been spent on bailouts and instead invest it in research and development of nuclear energy and energy storage. I think that will be the future and some sign of a significant advance in these areas will be the sign that a new and powerful bull market is finally at hand and companies in this area will emerge as the new market leaders.
I know this doesn’t help with the next trade and it doesn’t help if you are out of work. So what to do in the mean time? Well what I am doing is learning everything I can about wealth. The more I understand wealth the harder it will be for bankers to screw me over. I am trying my best to be flexible and adaptable and learn new skills. I have heard so many tell me that there is nothing they can do about this so they would rather not think about it. Maybe they are happier that way, but for my part I would rather go down fighting with my eyes open then just put my head in the sand and let this thing plow me under.
My formal education was technical and as such I approach my trading (such as it is) from a very technical perspective. I have read numerous long term forecasts for the market. I remember reading one article that claimed we are now in wave four of an Eliot wave pattern that is centuries old. Thus this correction will be even more severe than the great depression of the 1930s. I have read other articles where the analyst sees a double top in the S&P500 over the last ten years. Since we have broken the neckline, that projects down to about a value of 200 for the index as some point.
These are all very dire predictions for how bad things will get and where we are headed and quite frankly it is scary indeed. Not to fear though these are just silly lines on a chart right? After all, our political leaders have everything under control and once they have finished printing their way to wealth I am sure that the world will be alright again. If you read the news it seems everything is just getting better and better all the time now. There are green shoots all over the place as far as the eye can see! (read: sarcasm!)
I don’t claim to be smart enough to know whether this is true or not. I will tell you that personally I believe charts which only describe the honesty of time and price, more then I trust anybody’s opinion. Beyond trading though I wanted to offer up some thoughts in a general sense on where I think we are headed.
First when an economic recovery takes hold it will have nothing to do with anything that government is currently doing. In fact, the policies to date will hinder that recovery as their primary goal is wealth preservation of the mega rich and do not address wealth creation. A new economic expansion must come as the result of new industry and new industry will come about as a result of innovation.
So what will drive this new era of prosperity when it shows up? I have an idea and I will share it, although this may lead some to question if I am serious or not, but first let us take a look backwards. The last century or so has seen changes in our world that would seem like magic to those who lived before this time. They have been quantum leaps forward. These changes, when they came moved us forward in some way by orders of magnitude. When the industrial revolution came it allowed us to make orders of magnitude more replicas of goods then we ever could before. Increases in manufacturing lead to all kinds of innovations like air travel. Air travel allowed us freedom of movement orders of magnitude faster than anyone ever had before. Imagine telling someone in the 1870s that within one hundred years you could start from any major city in the world and within 48 hours be in any other major city in the world and that this would be possible to ordinary citizens, not just a privileged few! It would have been almost impossible for them to believe or understand.
Our industry and manufacturing lead us to the ability to make things orders of magnitude smaller then we had ever done before, and this lead to the semiconductor industry. Integrated circuits lead to personal computers and the ability to process information on a scale orders of magnitude larger then every before. Semiconductors also lead to the internet and information age. We now have access to orders of magnitude more information for orders of magnitude less cost than ever before. Imagine telling someone from the 1950s that within fifty years you could get information from anywhere to anywhere else instantaneously and almost for free! I would never have been able to share this blog post with you even twenty years ago, the technology just didn’t exist.
So what is next? My guess is the next leap will be with energy. Within fifty years I believe people will have access to orders of magnitude more energy at a tiny fraction of the cost they do today. After all energy is the most abundant thing in the universe. In fact the only thing the universe has more of is space! We are virtually starving surrounded by abundance. Oil was an easy source of energy. At the start it was just laying on the ground. A pre packaged source of energy stored in chemical form that the world just gave us. Now we are going to have to be smarter though.
Oil is heavy. We need to get smarter about the way we store energy. In the future I can imagine a device that fits in the palm of your hand, weighs less than a pound and contains more energy than a tank of gas: a portable power cell that allows us to carry energy with us just like we carry information today in the form of portable communications devices. The key to Tony Stark’s Iron Man was the power source. Why can’t we all have personal flying machines? Two reasons: the energy is too expensive and it is too heavy!
So how do we generate the energy in the future to begin with? Nuclear! I do not believe that the current fascination with windmills and solar panels will last. I believe that with the invention of nuclear fusion reactors that produce electric power cleanly will see the end to all this supposed “green energy” technology.
So if I were in charge which I am not I would take all that money that has been spent on bailouts and instead invest it in research and development of nuclear energy and energy storage. I think that will be the future and some sign of a significant advance in these areas will be the sign that a new and powerful bull market is finally at hand and companies in this area will emerge as the new market leaders.
I know this doesn’t help with the next trade and it doesn’t help if you are out of work. So what to do in the mean time? Well what I am doing is learning everything I can about wealth. The more I understand wealth the harder it will be for bankers to screw me over. I am trying my best to be flexible and adaptable and learn new skills. I have heard so many tell me that there is nothing they can do about this so they would rather not think about it. Maybe they are happier that way, but for my part I would rather go down fighting with my eyes open then just put my head in the sand and let this thing plow me under.
1 Comments:
Good article.
If you have not read this, you should:
http://www.amazon.com/Prescription-Planet-Painless-Remedy-Environmental/dp/1419655825/ref=sr_1_2?ie=UTF8&s=books&qid=1246727497&sr=8-2
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