Robert,
For my own style of thinking, I try and developed a series
of "Scenarios" that are tools for viewing the world and
the possible outcome of events of tomorrow. They help me adapt to the always uncertain future. This requires reading numerous articles and allowing ones intuition to have a strong hand, and establishing various 'stories' or 'scenarios' that might play out over a period of time.
The concept is beautifully presented in a book by Peter Schwartz called "The Art of the Long View."
Quote:
"Scenarios are stories about the way the world might turn out tomorrow, stories that can help us recognize and adapt to changing aspects of our present environment. They form a method for articulating the different pathways that might exist for you tomorrow, and finding your appropriate movements down each of those possible paths. Scenario planning is about making choices today with an understanding of how they might turn out."
"...precise definition of "scenario" is: a tool for ordering one's perceptions about alternative future environments in which one's decisions might be played out."
He worked out these techniques of building scenarios while working with a group at Royal Dutch/Shell who essentially did nothing else but do forward projections and scenario building. In a sense we all do this all the time, but usually not with any definitive result or discipline in mind. I have no doubt todays Royal Dutch company is following one of his scenarios.
>>Why do you think that the coming period, with all its problems, will be one of high interest rates?<<
You believe interest rates will fall in a cyclical response to the recent higher rates and market forces. In my reading I found numerous counter notes to that popular opinion and expectation. One of the best is on page 34 of 'Futures' magazine of January 2001. "Bond Yields to Rise as Bull Wanes." There are a series of other authors who suggest the same outcome. It is my contention that technical chart patterns, cyclical forces, political polarization, energy concerns and international capital flows will add pressures and will require interest rates will remain high for a number of years.
These are my opinions and reflect carefully thought out process that includes intuition. I have a couple of others that are different then the ones I've posted..., but believe this one to be the most probable.
I will keep all three in mind as the year unfolds and as a good trader will adapt quickly if they present alternative pathways.
Finally:
>>Myself, I am quite bullish on the outlook of the U.S. and the world. I believe there is a good chance of a recession in the U.S. but this will be a normal reaction from a blowoff in spending by both consumers and businesses. Much of this recent spending was brought about by a stock market bubble and demands a period of below trendline spending to correct it. I don't believe there are any serious structural problems at the root of it.<<
I can't disagree with you on your points made here, I'm not looking for a major recession, just a long, long slow resolution to the past 10 years.
My Best,
Chip |
