It's been quite interesting lurking the thread for some time. Quite a few bright people on the thread.
The charts would suppose and perhaps you might agree that the only thing that matters in psychology, i.e., the direction of the herd. War, famine, Y2K, the economy, a gold standard, the credit induced bubble [if there is one], TRIN, A/D divergence, etc., are all irrelevant. We human beings are particularly good at pattern recognition, even if none exists other than statistical coincidence. Gather enough data and one can make a statistical correlation with something; the markets provide ample opportunity to collect data.
Taking a look at the Nikkei/Naz chart you provided earlier caused me to take a quick look at the NAZ over the last 5 years. The chart pattern for 1999 doesn't look substantially different than that in 1998 or 1996. Equivalent gains to that of 1999 were seen in 1998, which of course didn't see the correction that the Nikkei comparison would have "predicted". In 1996 there were gains to a lesser degree but a more significant correction occurred in early 1997...but that is history and when the NAZ was trading around 800.
I could postulate that the NAZ in 2000 could be a repeat of 1999, 1997 or follow the pattern of the Nikkei. All based on pattern recognition. I won't be so bold as to predict which one is correct. Perhaps none of them will.
Everyone on this thread is, I'm sure familiar with the hedge fund directed by a few bright mathematicians and the subsequent collapse. Do we really believe that we are smarter or have better insights?
jttmab |
