DEflation anyone?

If you are serious about understanding the monetary system PROPERLY or gaining a handle on how it affects your Investments – you need to understand the current Inflationary monetary system.

A very severe by-product of Inflation is Deflation, at some point in time Deflation will rear its ugly head.

The current system despises Deflation, because it puts into reverse the system manipulators ploys – the current ploy is to make money continually by/from Inflation.

You would be very wise to check out http://www.deflation.com

by doing so you’ll join a few rare % of the globe that understand the current con and the possible side-effects those in power fail to explain to you!

The choice is yours, its your money not mine (I’ve learnt more than enough to safeguard myself)

and if anyone is unsure, since 2000 we have been inside a Deflationary Depression – the stock markets and credit markets actions confirm and prove this – I’ve also discovered that the use of Time Cycles can predict these events pretty accurately and their sub-divisions

Some Myths…….

Don’t Get Ruined by These 10 Popular Investment Myths (Part X)

Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. — NONE have a reliable effect on the stock market

By Elliott Wave International

You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

This series gives you a well-researched answer. Here is the conclusion of this 10-part series.


Myth #10: “Central banks and government policies control the markets.”

By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)

Virtually everyone believes this statement; certainly most economists do. Keynesians and monetarists believe that authorities can control the money supply and interest rates, and most neo-Austrians believe that the Fed is all-powerful when it comes to inflating: Whatever inflation rate it wants, it simply manufactures.

Not long ago [in late 2008 — Ed.] the U.S. government announced that it will fully back the debt of the mortgage companies it created (Fannie Mae, Freddie Mac); it pledged to use taxpayers’ money and borrow unlimited amounts to fund banks that it deems “too big to fail,” while pledging that the FDIC will fund shortfalls at all other banks. At the same time, the world’s top central banks offered unlimited credit at near-zero interest rates, in other words, free money.

According to the exogenous-cause model, these historic pledges and bailouts should have had immediate results. Take a look at Figure 20. Can you tell where on this graph of stock prices authorities took these actions?

According to the economists’ beliefs, the only rational place for them to have taken place would be at the bottom of the market. The minute the authorities began flooding the market with liquidity is the minute it should have turned up.

Figure 21 shows that in fact these actions took place in the early portion of the biggest stock market decline in 76 years. These actions did not push stock prices back up. The market finally bottomed months later, at a time when nothing along these lines happened.

It is no good to claim that these actions had results eventually. By that reasoning, any future turn in the stock market would prove the contention. Such reasoning is tautological, because the market fluctuates.

An exogenous-cause believer would do far better to explain this result by claiming that authorities’ actions of this type must be bearish, because every time they acted, the market fell; and when they finally stopped, it rose.

Economists do not advance this argument, because they can’t make sense of it. Instead, they cling to their traditional cause-and-effect logic, while the markets just do what they want.

Over the preceding pages, we have seen that interest rates, oil price changes, the balance of trade, changes in earnings, changes in GDP, the onset or termination of war, peaceful times, terrorist attacks, inflation, a central bank’s monetary policy and a government’s fiscal policy have no reliable effect on financial market prices. Sixty-four years ago, a financial modeler named Ralph Nelson Elliott, after observing markets for some time, concluded,

“Current news and political developments are of only incidental importance, soon forgotten; their presumed influence on market trends is not as weighty as is commonly believed.”

According to our investigation, Elliott was too generous; they appear to carry no weight at all.

I am unaware of any exogenous-cause claim that holds up under scrutiny. An event that seems to affect stock prices one way in the present, when investigated in the past, fails to provide any consistently reliable relationship. Even claims that seem inescapably reasonable, if not irrefutable, fail the test of even moderately rigorous empirical observation.

I have tested every exogenous-cause statement or assumption I have heard, not all of which are included here. So far, none of them work. Many exogenous-cause statements contradict others, as we saw throughout this discussion. Proponents often adopt one argument and then the other, to fit market events.

We still await exogenous-cause proponents to make any statement of stock-market causality — or social-mood causality — that holds up consistently throughout the historical record. …


Market Myths Exposed

Download Your Free eBook: Market Myths Exposed

This 33-page ebook takes the 10 most dangerous investment myths head on and exposes the truth about each in a way every investor can understand.

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This article was syndicated by Elliott Wave International and was originally published under the headline Don’t Get Ruined by These 10 Popular Investment Myths (Part X). EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Update – December 2014

Hi All,

Over the past few years I’ve posted lots for little interaction so in 2014 decided to pursue a few other ideas and take a well earned break from the blog.

I made a call (well before the event) that you needed to be very very careful from May 2013 to December 2016 – the UK FTSE100 has basically traded sideways throughout that time, with a few ups and downs forming a trading range and as I write this post markets around the world are falling fairly sharply and fast.

How long will it last and how far will it go? ┬áNo-one can tell you that, timing the markets with precision on the short-term is Impossible – believe me, I’ve spent years researching! Nothing works 100%

I’ll not be writing too many more blog posts this side of December 2016 – that’s 2 years from now!

The only thing I will say and it is on the W.D. Gann page of the blog is that I predicted a turning point for May (to the day!) 2013.  that was when the 2009 up cycle ended and turned negative, so we had a 4 year up cycle from the 2009 bottom.

The overall cycle in force from 2000 is still negative, it does not turn up until December 2016, that is why the markets have been yo-yoing all over the place since 2000 and developing a rather large trading range.

I’m heavily cautious of establishing new positions during this time, but if the markets fell 25% that would probably represent a great buying opportunity for some quick profits – I have no idea whether it will fall that much at all.

The other thing you need to watch during 2015 is (as I’ve been saying for some years now) DEFLATION – with Oil dropping like a stone it could be the catalyst that creates a period of Deflation in terms of pricing – Deflation has been present in its true sense for the past 2 decades but everyone thinks Deflation is negative price inflation.

The one positive on the horizon is as Gann stated the 5th years of the decade are typically positive in terms of returns so we could see a positive year ahead.

Have a great Christmas and New Year and all the best for 2015