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Rob Wile at Businessinsider.com asked me to clarify my prediction of a 20% stock market correction in 2013. (See my post below.) So I tapped out the following message on my smartphone:

---- Start ----

"I'm glad you had the wisdom to get a cartoonist's opinion on global financial markets. 
 
The 20% estimate is based on the fact that 20 is a big round number and more likely to happen than 30%. I don't like to over-think these things. 
 
My reasoning is that the people at the highest levels of finance are brilliant people who chose a profession with the credibility of astrology. And they know it. Then they sell their advice to people who don't know it. So that's your cast of characters. 
 
Now consider that the characters - who are literally geniuses in many cases - have an immense financial motive, opportunity, and a near-zero risk of getting caught. How do you think that plays out?

We can only give a guess of the odds that the market is being manipulated. So I ask myself: How often does the fox leave the hen house because he feels that taking an egg would be wrong?
 
If you have a different answer from mine, I applaud your faith in human nature."

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Mar 13, 2013
Scott, please receive my standing applause for perfect logic in perfect form!
 
 
Mar 6, 2013
Feels like a vocal minority have become really critical in their comments over the last few weeks. Lighten up people!, this is a personal blog that Scott puts out there to challenge your thinking and entertain. It always accomplishes both for me.
 
 
Mar 5, 2013
Now the USA today is calling for the government to stop QE-infinity.

http://www.usatoday.com/story/opinion/2013/03/04/federal-reserve--quantitative-easing/1963539/

If that occurs, a market correction could happen.
 
 
+9 Rank Up Rank Down
Mar 5, 2013
I've read your response three times, (and love it by the way) but I still can't get over the fact that you managed to string together more than two coherent thoughts from your phone. With proper punctuation to boot! As soon as I start pecking, I lose focus and can't convey anything more complicated than 'see u at home.'
 
 
+1 Rank Up Rank Down
Mar 5, 2013
@Phantom II
You have got to be one of the dumbest people I've ever seen post a comment, and that's saying a lot.

What didn't you understand? It's clear as a bell!

Since your IQ is the same shape as your bung-hole, let me translate it for you...

-The reason I chose 20% is that's it's less than 30% but still a round number....
TRANSLATION: It doesn't matter what %, because unless you have an actual time machine, you, nor anyone else can know what the actual % will be... so for convenience sake, round it off to an absurd, but not too absurd number.

-Financial analysts are the same as astrologers....
TRANSLATION: Different numbers, same predictability. Hell, I'd even give the odds to the Astrologer. Financial Analysts don't know what's going to happen as much as anyone else. They might be able to guess better, based on astute observations, but to have that kind of insight, you might as well be an Astrologer.

-Those same financial analysts...
TRANSLATION: Scott was being sarcastic about the financial analysts being geniuses... Some might be smart, but intelligence is a relative idea. Being a Financial Analyst means being driven by greed to acquire more money for the sake of having more money. Though individuals may vary, as a whole, Financial Analysts will take any opportunity, with very little morality, if any, that arises to make a buck.

-So Therefore it is proven....
TRANSLATION: Do you really not know the saying "The Fox guarding the hen house" ? If not, our discussion is done.

If you cannot connect the dots and make sense of this post, well, all I can say is wow... you're dumb. I'm guessing you make a lot of money while having no actual skills while telling everyone else what to do and having the ego to believe yourself.
You are the reason humanity has a dim future.
 
 
Mar 5, 2013
That is brilliant. Could you come to the UK please and give our bankers some advice about how to get their snouts out of the trough?
 
 
Mar 5, 2013
this is the best possible response of all possible responses :)
 
 
Mar 5, 2013
I don't exactly agree with you that the markets are being manipulated but I can only say:

Fantastic post, Scott !!

PS: I work in the financial services industry since almost the last thirty years.
 
 
Mar 5, 2013
Sorry about that. If you want to reply, please do it to the earlier post.
 
 
Mar 5, 2013
This is the most disjointed and unfocused post you have ever made, and that's saying a lot. What the heck are you saying?

Here's what I read, and please correct me if I'm wrong (of what you said):

- The reason I chose 20% is that it's less than 30% but still a round number.

- Financial analysts are the same as astrologers.

- Those same financial analysts are genuises but have a great financial motive to do something which you don't specify, and yet who won't get caught doing it. Whatever it is.

- So therefore it is proven that the market is being manipulated because foxes eat eggs in a henhouse rather than leaving them alone.

Scott, you are usually cogent in your explanations, even if your explanations are inane. But in this one, there is no way to connect the dots. Let me be as clear as I can be: THIS POST MAKES ABSOLUTELY NO SENSE.

Now, if you'd like to try it again, and to make some sense out of this, then I'd be more than happy to consider what you've proposed.

Until then, I fear that your comments will be relegated to the dustbin of history.

As well they should.
 
 
Mar 5, 2013
This is the most disjointed and unfocused post you have ever made, and that's saying a lot. What the heck are you saying?

Here's what I read, and please correct me if I'm wrong (of what you said):

- The reason I chose 20% is that it's less than 30% but still a round number.

- Financial analysts are the same as astrologers.

- Those same financial analysts are genuises but have a great financial motive to do something which you don't specify, and yet who won't get caught doing it. Whatever it is.

- So therefore it is proven that the market is being manipulated because foxes eat eggs in a henhouse rather than leaving them alone.

Scott, you are usually cogent in your explanations, even if your explanations are inane. But in this one, there is no way to connect the dots. Let me be as clear as I can be: THIS POST MAKES ABSOLUTELY NO SENSE.

Now, if you'd like to try it again, and to make some sense out of this, then I'd be more than happy to consider what you've proposed.

Until then, I fear that your comments will be relegated to the dustbin of history.

As well they should.
 
 
+8 Rank Up Rank Down
Mar 5, 2013
I think that the evil financial geniuses are smart enough to know the whole world (meaning people with money and power) is watching the stock market.

That's why they tend to play the games you allude to in places where they are less likely to get blamed - or where they can shift the blame to other, more vulnerable players.

The mortgage loan mess is a case in point. The EFG's created mortgage-backed securities, blessed by conflict-of-interest-riddled credit agencies and insured by CDO's. They knew the fundamental investment (liar loans) on which everything hinged was fraudulent, so they cleverly bet against them any time they were not actively pitching them to investors.

They suffered a great deal of finger wagging and the occasional hand-slap feint after the economy melted down, but now that that has blown over they've moved on.

Some of them are now packaging and selling student loans. It will be interesting to see how this all plays out. These "financial instruments" are in great demand at the moment - which, if history repeats, should lead towards aggressive hawking of student loans, expanded access to people who shouldn't get them and will never make an effort to repay them. The credit agencies will declare "it's different this time. These are sold investments because blah blah blah." AIG will insure them knowing if it all goes bad, taxpayers will bail them out. Meanwhile, the EFG's will spend whatever time they have left over from pitching the product - betting against it.

Of course, that will bring the stock market down, which is something they will be able to time - by creating the initial crisis, so - maybe you are on to something....
 
 
Mar 4, 2013
And I just found a interesting article from Forbes online...

Can Planets Affect Your Portfolio? - Forbes

www.forbes.com/sites/kenrapoza/.../can-planets-affect-your-portfolio...

Someone should make financial analysis tarot cards. It would be interesting to see if they perform any better than a "certified" analysts.

To determine my random analysis, I use the first two numbers of the first license plate I see drive by my house, then multiply those two numbers. Which at this moment was 64. So my analysis is an 24 % correction.
 
 
+4 Rank Up Rank Down
Mar 4, 2013
So, did you sell everything?
 
 
Mar 4, 2013
@Melvin1

[ They must have some credibility or else wise, wealthy people wouldn't pay them so much.]

What makes you think WISE wealthy people do?
 
 
+1 Rank Up Rank Down
Mar 4, 2013
Amusing response. But I think you vastly underestimate how difficult it would be to manipulate markets. World stock markets are now valued at over $50 Trillion (let alone the $800 Trillion in derivatives). That's a lot of money to move. Even individual stocks that are occasionally manipulated tend to be very small cap - and the odds of getting caught at that are not so slim.

It would seem easier for a couple of big news networks to sway public opinion and cause market panic/euphoria. They probably already inadvertently (or so I hope) do this.

I'll also take issue with humorous statement that financiers have "the credibility of astrology." They must have some credibility or else wise, wealthy people wouldn't pay them so much. And what they do is allocate capital according to best estimated uses - and diversify risk in many cases. You do believe in capitalism, right? That's what it's about. Like weather forecasters, they don't always get it right, but they're still generally useful and the best we have.
 
 
+9 Rank Up Rank Down
Mar 4, 2013
I once sat down with our Chief Actuary and asked how a certain number can possibly be right. He said "...that number can be anywhere from 1 to a billion and every one of them is right as long as the actuarial assumptions (i.e. base story) used is reasonable"
 
 
Mar 4, 2013
LOL. :D


I remember one panel from your first dogbert book (you need to do another) that cynicism is the same thing as experience. Every time I hear about the gurus, they are telling people to sell when they are buying or telling people to buy when they are selling.

I predict a correction of 15% because it's between two round numbers and therefore sounds more scientifically accurate to the ignorant masses while being more likely to happen than a 20% correction. Plus if a 20% or 10% correction happens, I could round my prediction up or down as I need to.
 
 
Mar 4, 2013
Einstein said - "Everything should be as simple as it can be, but not simpler”

Scott, you have just raised "simpler" to a whole new level.
 
 
Mar 4, 2013
It is vastly easier to manipulate single stocks than the entire market. Why would the fox break into the Fort Knox of chicken coops when individual chickens are easy prey?

Manipulation of individual stocks is not likely to cause a coordinated move.
 
 
 
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