Planning for Retirement
We are working very hard to launch Socrates. To answer all the questions about what to do with retirement accounts, much of this depends upon regulation. Clearly, stay away from government debt outside the USA. Inside the USA, stay away from state and local debt for now. Federal debt is OK for up to two years max. So definitely nothing long-term at these rates.
We are getting up the correlation models. That is where you can ask questions like, “What is the best investment?” for it will correlate the entire world. You can include stocks as well, so that would then include all shares globally.
Those who worry that somehow our computer would become the instrument that everyone followed, no worries. That is like saying what if every one voted Republican or Democrat. Here is an example of a typical hate email from one of those negative jerks who can only view gold biasedly and cannot get that out of their mind. They refuse to consider perhaps they are wrong so they look at the world and blame everyone and everything for their own failure. Their hatred pours out of every word and quite frankly no matter what you say, they will always disagree.
So don’t worry. There will always remain a group of people who are lost in the trappings of their own mind without the slightest concept of even how to program anything, but will refuse to accept that they are wrong. They guarantee history repeats since they are incapable to learning from any mistake in life.
Only a fool would believe that the ‘opinions’ of Socrates — your computer named after the father of Authoritarian government — are independent of the data you feed into it, and that such data is free from your conscious or unconscious bias.JC
So no worries, there will always be people for us to trade against. This person is uninterested in figuring out anything since he already knows everything based upon his opinion. That must be awesome. He is the classic type who will continually stick their finger in an electric-socket assume one time he will not get shocked. We need the clueless types for they will always be incapable of any advancement blaming the world and crafting conspiracies to explain their own failures.
So indeed. While the rest of us learn from our mistakes and history, we are condemned to watch others repeat it. This is our real HELL on EARTH. BTW: From a programming perspective, you can no more instill “bias” into a computer than you can instill “emotion”. Why would you even if you could? It might wake up one day and decide it does not like you. That’s the stuff of movies. The only way to approach something this massive is to teach it how to analyze and let it create its own knowledge based upon everything that you can get your hands on to feed it. What comes out is at least globally consistent, but it has reveal truths about market movements and correlations that human analyst have not seen because of their bias.
How History Always Repeats
COMMENT:
Martin,
I just read your post “Does China’s Devaluation Reduce the Odds of the Fed Raising Rates?”.
The line towards the end “The Fed is being pressured by the IMF and other nations not to raise rates because of external economic conditions” brings to mind the early chapters of “The World’s Greatest Bull Market” where Europe convinced the Fed branches to sacrifice domestic policy for European interests, lowering rates to make money cheap for Europe.
Seems like it didn’t end well then, either.
Have a good day, and keep up the good work.
-DB
REPLY: Yes, indeed. You predict the future by looking at what was done before. We are like a mouse in a maze who cannot figure a new way out.
The Press’ Hatred of Trump
It is interesting to watch just how upset the press is about Donald Trump. The latest poll shows that 60% of the women in the Republican Party support Trump. The press is just beside themselves after Fox News’ Megyn Kelly tried so desperately to paint Trump as anti-women. That has come back to haunt her for the more the media tries to make sure we have establishment candidates only, the higher Trump rises in the polls. According to aCNN Poll, Trump has 24%, Bush 13%, with Carson at 9%. The FOX News Pollhas Trump at 25%, Carson at 12%, and Bush at 9%.
It is very early in the game. When the economy turns down, we should have one year into that trend before the elections. Hillary has had to turn over the server, and if it is scrubbed, she may indeed have a criminal problem. The company that held her server probably has a backup, and if the 31,000 emails are recoverable which she erased, oh boy! They just may reveal her deals with foreign countries in return for donations to her charity. OOPS!
Market Talk — August 18, 2015
With the exception of the Shanghai market today — IF we can excuse a 6.5% decline — most markets were well behaved, generally speaking. European stocks were off but only modestly and the Dow is slightly down after exceeding yesterday’s high.
The U.S. dollar continued its stronger tone to Emerging Market (EM) currencies. Again, Russia and Turkey lost around 1% each. Sterling was the one gainer today against an impressive US$ performance after inflation data came in at +0.1% against an expected 0% (last seen +0.4% on the day).
In the bond markets, EM debt remains illiquid and generally well offered. European governments saw widening of peripheral’s (BTP’s and OAT’S +4bp with Portugal +7.5bp). The TY/RX spread closed this evening at +153bp.
The U.S. Treasury curve saw a 1bp steepening 2/10’s and +2bp at 2/30yrs. Few dealers are saying that it really isn’t a yield curve these days as the front-end doesn’t move (awaiting the Fed) while the long end reacts to stocks or “events”. The forwards are implying a 45% chance the Fed moves in September. The consensus is a 25bp rise.
Real Estate
QUESTION:
Dear Armstrong,
Your work is absolutely brilliant – Thank You.
In your paper “a forecast for real estate”, your graph forecasts real estate trending down from 2015 till 2033. Based on this forecast will the real estate collapse begin in Australia after 2015.75? If so when will buying opportunities begin?
In some of your interviews you mention that private assets will rise sharply after 2015.75. Given the above time line for the decline in real estate does private assets refer to all non real estate assets (stocks ext.) ?
Many Thanks.
Kind Regards,
T
ANSWER: That chart is the U.S. market. However, the 2015 reaction rally in the USA has seen only the high-end of the market rise. The 2007 high remains intact for the broader market that peaked as a bubble. That applies to the speculative areas that were really in the low-end fueled by the banks.
The 2015 target is in REAL terms (adjusted for purchasing power of the currency). There will be a decline in the high-end markets for the USA, Europe, Asia, India, and Australia. However, this appears to be impacted by the likely rise in dollar interest rates, shrinkage in liquidity that should reduce banks’ appetite to lend, and rising taxes. These are all negatives. The cycle is prolonged because we are looking at a complete restructure in government and debt — the sovereign default so to speak. Real estate has counted on inflation and availability of loans, which has leveraged the entire market higher. So there should be a decline in REAL terms (under deflation), and only when the threat of taxation subsides can real estate make a comeback.
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