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Author Topic: Fractal Stock Market Analysis?
fs

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Icon 1 posted July 09, 2010 02:06      Profile for fs   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
From the New York Times,

quote:
Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said.
I can't really get excited about more stock market doom and gloom--as long as the underlying causes of the current economic problems are allowed to persist, none of it is going to get any better.

But fractals! Cool!

This bit, also, I found interesting:
quote:
He has far less day-to-day influence now, after years spent developing a theory he calls “socionomics,” which holds “social moods” as the cause not only of market cycles but also of economic and political events. A grand cycle is ending, he says, and the time for reckoning is near.
I suppose the information accessible on the internet and the way it has changed how we communicate have also changed how we invest, who we talk to about our investments, how we research them. Not just financial reports and company information, but less tangible things. Back when my grandparents were making stock purchasing decisions, they couldn't pull up blogs of GE or IBM employees, and if they discussed their investments with anyone other than their financial advisor, it would be IRL friends and neighbors, with similar educational, social, and economic backgrounds, and in the same geographical location, not on message boards or blogs with hundreds or thousands of people from all over.

I kind of want to read his books.

(link via Futurismic)

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Posts: 1973 | From: The Cat Ship | Registered: Mar 2002  |  IP: Logged
fs

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Icon 9 posted July 10, 2010 01:37      Profile for fs   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
Is it that it's just too depressing to even talk about? Or just not interesting?

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Posts: 1973 | From: The Cat Ship | Registered: Mar 2002  |  IP: Logged
TheMoMan
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Icon 1 posted July 10, 2010 04:19      Profile for TheMoMan         Edit/Delete Post   Reply With Quote 
____ fs, or many people feel that the stock market is like going to a casino and giving your money away, for entertainment.

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Benjamin Franklin,

Posts: 5836 | From: Just South of the Huron National Forest, in the water shed of the Rifle River | Registered: Sep 2002  |  IP: Logged
GrumpySteen

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Icon 1 posted July 10, 2010 09:53      Profile for GrumpySteen     Send New Private Message       Edit/Delete Post   Reply With Quote 
fs wrote:
Is it that it's just too depressing to even talk about? Or just not interesting?

The socionomics thing is kind of dumb because it's an attempt to simplify human behavior in order to make it more understandable. Prechter believes that society's moods drives major events and that is true at least part of the time (just look at German society in the years leading up to WWII). There are just as many examples of great events that were not caused by society's moods (the black plague, for example). Sometimes people make events happen, sometimes events happen on their own and people have to deal with it *shrug*

As for the fractal bit... Wikipedia has a quote that sums it up nicely:
The Elliott Wave Principle, as popularly practiced, is not a legitimate theory, but a story, and a compelling one that is eloquently told by Robert Prechter. The account is especially persuasive because EWP has the seemingly remarkable ability to fit any segment of market history down to its most minute fluctuations. I contend this is made possible by the method's loosely defined rules and the ability to postulate a large number of nested waves of varying magnitude. This gives the Elliott analyst the same freedom and flexibility that allowed pre-Copernican astronomers to explain all observed planet movements even though their underlying theory of an Earth-centered universe was wrong.

Also, if the guy is such an awesome analyst and is making such great predictions, why is selling books for a living rather than enjoying being fabulously wealthy? He made a couple of spectacularly good predictions in the past, but he either doesn't seem to be too good at repeating his success.

Finally, for what it's worth, I guessed that the stock market was going to crash and burn too. I moved all my 401k investments into bond funds and didn't lose anything in the last couple of years... but I'm not writing books about how clever I am. I admit that I just made a lucky guess.

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dragonman97

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Icon 1 posted July 10, 2010 11:59      Profile for dragonman97   Author's Homepage     Send New Private Message       Edit/Delete Post   Reply With Quote 
I saw that article a bit ago, and agree with Steen that he seems to be something of a hack. I don't think he's doing that bad financially (it suggested that his fund has been producing decent, safe levels of return), but I think his 'the end of the world is nigh' predictions are over the top.

OTOH, I do think there's something to this social stuff, as it seems like the folks on Wall Street are very touchy to things that should arguably have no impact on stock prices. Back in the days of Greenspan, it seemed that if he sneezed, the entire market would go to hell - I'm not certain they feel the same way about Bernanke, but the generally fickle nature does still seem to be there.

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The Famous Druid

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Icon 1 posted July 10, 2010 21:30      Profile for The Famous Druid     Send New Private Message       Edit/Delete Post   Reply With Quote 
Couldn't read the article, but I won't let that stop me commenting on it...


There's no great trick to predicting the past..

Predicting the future is far more difficult.

That said, treating the stock market as a psychological phenomenon has merit.

Markets are driven by two emotions, greed and fear. Sell when it's driven by greed, buy when it's driven by panic, and you'll do pretty well most of the time. I've done pretty well out of my share purchases during the GFC.

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TheMoMan
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Icon 1 posted July 11, 2010 08:56      Profile for TheMoMan         Edit/Delete Post   Reply With Quote 
____ Software to track downtime on Manufacturing equipment, and predict failure times. Over the years I had to learn about six different systems none of them worked as well as one written in house, by our own ITs They listened to us and what we wanted and needed, then Corporate said no the whole corp has to use the same software. So we had to learn their system, it was poop.

____ Any way we found that 90% of an average was generated in 9% of run time, we started to call it the 90 and 9 rule. So 90% of the time you have too many maintainace people, and 9% of the time you do not have enough, time to call the bean counters.

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Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.


Benjamin Franklin,

Posts: 5836 | From: Just South of the Huron National Forest, in the water shed of the Rifle River | Registered: Sep 2002  |  IP: Logged
TheMoMan
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Icon 1 posted July 12, 2010 03:56      Profile for TheMoMan         Edit/Delete Post   Reply With Quote 
____ When do we sell our shares of doom and gloom?

http://www.dailyfinance.com/story/media/wall-street-apocalypse-finances-doom-and-gloom-crowd/19506748/

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Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.


Benjamin Franklin,

Posts: 5836 | From: Just South of the Huron National Forest, in the water shed of the Rifle River | Registered: Sep 2002  |  IP: Logged


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