Down goes the Dow

Marty,

Your curve modeling would have been a very wrong application for a Nikkei stock investor of the 1980s.

So sorry.

Igy

Ghost of Igloi wrote:

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)

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=737#ixzz4N50pv9qh

Marty,

No this was the original question, and as I pointed out a weak model.

I presume you are bright enough to realize that isn't a question.

Here's a short history of this discussion. I was asked by another poster for my mathematical rationale for arguing against Dow 13k. I offered the model above complete with explanation. You (GOI) jumped in with a model from John Hussman at which point I asked you to explain the reasoning he included the "ratio of ratios" as a factor. Instead of answering the question, you proceeded to introduce various strawmen and other diversions presumably in an attempt to distract us from learning that you did not understand Hussman's model.

So THAT was the original question in our little discussion. If you care to offer a thoughtful answer to the question, then we can continue to dialogue and I will be happy to try to answer any of your subsequent questions. I would, of course, also be satisfied to hear you offer the most honest answer: "I don't know." If instead you continue to take the low road and obstruct the conversation, then I shall retire with the understanding that Hussman fooled you too.

The ball is in your hands.

Marty,

I will answer you this way. Your model has little predictability value as I pointed out. If you chose to discount Hussman, fine, I provided you with the rationale direct from the source. Three other valuation metrics far superior to yours, and historically have good predictive value are: CAPE 10, Tobin's Q and the Buffet Indicator. I provided a link to the OFR Report "Quicksilver Markets." All three as noted in the article show the current stock market near two standard deviations above norm.

I will assume that you cannot understand how an exponential growth model provides little information at valuation extremes either or low.

The ball is back in your court.

Igy

As expected...you cannot answer the question.

This is not about any model other than the one you presented from Hussman. The rest is just noise. Nothing you provided explained his "ratio of ratios". Your failure to quote an explanation despite claiming its existence is proof that you are not telling the truth. So be it. I leave this discussion knowing that Hussman's model is voodoo mathematics. Believe him at your own risk.

Good bye.

I'm not taking a position regarding the different formulas used other than to say that Marty has a point regarding the lack of a meaningful explanation regarding part of the Hussman formula presented by Igy. It doesn't make a lot of sense.

Econ,

I trust you may wish to question a model that applies a formula at a market top to somehow extrapolate a prediction for the future. It was very easy to poke a hole by using data from periods of under performance. And you can find 30 years of stock market underperformance that is the mirror opposite of the last 30 years.

On the other hand, Hussman and others apply a model that actual examines valuations metrics, financial data and back tests them for reliabilty. Please find below a link to a Dr. Hussman article that reviews various models and their reliability. If you wish, you will find plenty of data to support his view, and by the way far more than offered by Marty. Furthermore, you can Google the Office of Financial Research report "Quicksilver Markets." Of course feel free to conduct your own research on both the reliability, efficacy, or use of Mr. Marty's formula in any scholarly financial research. If you find it, please lforward a citation sice I would be interested in reading the piece.

http://www.hussmanfunds.com/wmc/wmc151130.htm

Igy

If you want one that actually works:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2720600

But this is a methodology, not a model. As soon as somebody comes up with a model claimed to represent any part of the market, position, or momentum, it doesn't work any more. To wit: Elliott Wave. As soon as people know about it, the mechanics that made it correct no longer hold true. Everybody knows about Elliott Wave, and everybody knows that everybody knows about Elliott Wave. So you can't even use it as a contrarian indicator, because everybody knows that everybody knows that it no longer works.

Igy, as I said I don't really care about any of the models. As coach d said, once they're out there, they are pretty much guaranteed to be unreliable.

The issue that Marty was right about was that no one, including you, apparently can explain the justification for at least part of the Hussman formula you offered. I don't know why anyone would rely on a formula that they don't understand.

Can we go back to the fighting and cheap shots?

You guys are boring the living sh$t out of me.

Sure, you anti-Semitic loser.

Econ,

I provided various links to information on models you could care less about. So I suggest you seek out information that can be proven reliable, which I have already done.

Igy

I'm not sure why you won't answer his simple question.

Econ 101 wrote:

I'm not sure why you won't answer his simple question.

What simple question is that?

You better stop with the smears directed my way.

Igy

We will see about that. I not part of your deal.

Igy

Hey, Igy/K5, do you know what "smear" means? And what does "I not part of your deal" mean? Is English your second language? Am I asking too many questions?

Econ 101 wrote:

I'm not sure why you won't answer his simple question.

Quite simply, it's because he cannot. No one can because it's a nonsensical equation.

Jeffy Tull wrote:

Econ 101 wrote:

I'm not sure why you won't answer his simple question.

What simple question is that?

The question was in regards to the purpose of the "ratio of ratios" factor in a formula of John Hussman's that GOI was offering as a superior model. GOI was unable to answer the question.

Marty,

I answered your questions many times but you are not satisfied because you are a troll and that is your job.

Igy