Saturday, June 18, 2011

TEN YEARS FROM NOW


For those that wish to look ahead a little further than the next trade I thought I would spend some time with the longer term outlook. Where will we be in the next decade? After all what's the point of making these trades and trying to position yourself for the future if there is no future. That premise seems simple enough.

So let's assume that the Grand Mega Economic Supercycle manages to clean out our excesses and rearranges our landscape without destroying the majority of this earth's inhabitants putting us into some form of neo-ice-age. I think that most readers inherently want this planet to not only survive but to continue to transform itself in a more favorable direction.

This is what Supercycles are known for....HOWEVER....A bear market of Grand Supercycle scale should be of sufficient magnitude to be accompanied by a severe economic recession. The last Grand Supercycle was terminated by the bursting of the South Sea Bubble and Mississippi Bubble in 1720. This was followed by a period of economic stagnation which lasted over 50 years, which is longer than the length of the Great Depression. If the Grand Supercycle theory is correct then the magnitude of the current recession should be of greater magnitude than the Great Depression, and possibly of greater magnitude than the severe economic recession from the 1720s–1770s that terminated the previous Grand Supercycle of the Renaissance.

I wish to challenge this. I want to look at this from the standpoint of the underlying changes in technology and the impact that this can have on how we come out of this in terms of the timeline and in terms of what the "other side" may look like.

Do I think the next five to ten years will be ugly? Yes....but what will be driving force out of this? Of course it will be technology......and it will be an exponential change in areas of nanotechnology...biotechnology....and artificial intelligence that drive us over the next ten years.

We now have billions of computers in the hands of young minds all over the world. When you place that much power in that many hands you are going to find that the explosion of advances and innovation will be astounding during the next decade and beyond. Imagine villages and cities in developing nations with intellects that previously were left to lie fallow without the benefit of attending the finest western universities to contribute the next "great thing". Now we will see what happens when you marry the internet, the cloud, and exloding chip capacity with Ruwanda.

Look at the abysmal failure of our own "higer" educational system to adapt to changing planet. How did we take some of our greatest institutions into the twemty-first century? Well one absolute anchor created from a "wealth in decadence" standpoint was the LEGACY system in these famous institution. Enormous percentages (as high as 50% in some institutions) are filled before any application is made. That's how George W. Bush was able to attend Yale and Harvard.....I wonder who missed that slot.

With the connectivity and computer generating capacity available now we no longer are going to depend on this antiquated educational system for our "next change". That change is already happening and will explode during the next ten years. The "social medias" are where a lot of this will emanate from. In fact the "social media" is being created by "college dropouts". We will be able to marry pockets of innovation through our connectivity to provide the an exponential move to actual development and production. We have countries with enormous populations of engineers and labor that are eager to begin for example the "next generation" of solar panes and wind turbines and fuel cells etc.

The same breakthroughs in speed of change in medicine is occurring with biotechnology. Look at how rapidly the outbreak of swine flu was contained. Literally stopping its spread with the vaccine developed and IMPLEMENTED in just a matter of a few months.

Many aspects of this change are going to provide a threat to the current regimes and political structure of the PTB. They will have to adapt and I am sure they will. You and I as investors must see the future. Near term its going to be ugly but if we get through this the opportunities are going to be enormous. The next Google...the next MSFT...the next Facebook....they will be bought for pennies on the dollar during the next few years. Some kid sitting on the Serengetti may be dreaming the next "big thing" on his computer. We have to get through to the other side first. gl all

The following article must be carefully perused and it fits well with what Joe Red and myself have postulated to usher in QE 3.......its a dooozy of a ride.....gotta have the cash if they push it to that level in two mo.

http://news.goldseek.com/GoldSeek/1308238838.php

20 comments:

  1. Some market analysis with charts:

    http://news.goldseek.com/GoldSeek/1308238838.php

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  2. What he is saying is that 1249 on S&P would be tested and then short term spike to 1300 followed by take down to 1050 before Bernanke starts QE3 and violent upward from that point for a while and as far as miners the best time to buy around end of July to mid August.

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  3. Some comments:

    It is my understanding that if you believe in DOW theory and that we are overall in a Secular Bear Market, then the market CANNOT trade higher than the high in 2007. Thus, perhaps the high we set this May is it.

    When I had my taxes done this April, my accountant told me he is already short the market. I have always found him to be a knowledgeable guy.

    I remember when "Bat" posted here ??several months ago?? that he was already all in cash.

    Perhaps Inlet might comment. Do you think the high this May is it??

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  4. Doc.....just food for thought....setting a "new high" and crushing the bears again would only reinforce "buying the dips" the same could also be accomplished with a strong counter trend rally to the 1340 level.... setting the stage for an unrelenting down move later in the year with periodic countertrend rallies. Either strong rallie can be accomplished with the energy built from the shorts piling on in anticipation of P3 beginning now (which as you imply it may have). The goal is to prevent as few shorts as possible to make money and as few longs.

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  5. Doc -

    If you look at the cycles and how they are lining up I see little reason for optimism. Short term you have a 1 year cycle bottoming first week of July, 20 week cycle 3rd-4th week of July. So one might conclude that this is positive for the fall as these cycles turn up.

    It might be somewhat but don't ignore that soon the PI cycle will be in the final 12.5% of its downleg into early next year (and that should be the hard down portion of the down leg).

    Droke has pointed out the 6 year cycle (part of the Kress cycle combo) tops in the Fall (Sept?) and often marks tops in the market. And of course there are other long cycles that come into play in 2012 (10 year, Kitchin) in a negative way.

    And we haven't even gotten to the biggies yet. Of course, there will be countrend rallies, but until proven otherwise the trend is down and could be down for a long period. The clock in my vehicle is stuck on 6:46 - is that a sign? hehehe

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  6. possible pattern, may not be as clean as seen when Joe did the neckline save of SLW (going much lower if the above scenario pans out) or shorting LDK just before it peaked on the daily (also going lower into Joe's 5-6 range). Not sure if the first bounce will be of that quality. Oh well need to digest the chili cookoff.

    As for Kli's 10 years forwards, even if we get a miraculous low period of 5-6 years of Mad Max meets the Postman ending around 2017-18. It will take some time to rebuild decayed, abandoned or destroyed infrastructure. Without a readily available supply of cheap energy for JIT supply chain the die off will be brutal within 1-3 years afterwards. Takes alot of energy to irrigate those deserts in California. Nearest survinging social/political model to look at when complex systems collapse would be North Korea.

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  7. Oh, red it is hard to fathom...many, many starving in N.Korea for years...Kli, I read an article in the New Yorker last month about quantum computers--this kind of advancement give me hope, but unfortunately it looks like my last years may not be Golden! And please comment on the banning of gold/silver otc trades for U.S. How will this affect price?

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  8. Red....hehehe...can't you give me a chance to be positive???? heheheh....I do want to make a point to clarify. With the technology advances coming the shift of growth and power may be multifocal and concentrated within regions that have resources and weather patterns favorable for growth.

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  9. No kidding first time in a while got to read something warm and fuzzy with the morning brew. Leave it to Red to keep things real! I'm with Sis looking for Comment on the banning The Otc gold/silver forex. Whole subject a bit over my head....

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  10. Agreed that advances in technology will be somewhat mind-boggling in the next decade or two (thanks for raining on that parade, Red! :->). But I wouldn't look for the next big thing to come from Africa, so I disagree with that part. There is no hope for that continent, and it will continue to be the garbage dump of the world. Sorry if I sound harsh or politically incorrect, but that's the reality as I see it, with plenty of past history and present-day trends to back that up.

    Replace Rwanda with Mumbai and the Serengeti with Shanghai, and we got something. I expect Asia (China and India, specifically) to play a major role in this area going forward. But the US/Europe aren't going anywhere, and I still expect the West to lead the way.

    As for the market, if the above analysis is correct (1249->1300->1050) by August, time put that cash to use with the right opportunities. I'm thinking of shorting the banks and tech, because their Q2 earnings will be terrible. Also looking to pick up some miners if the beatdown continues.

    BTW, anyone following RIMM? Could it possibly go to the teens before someone tries to buy it? It seems to be in big trouble in the highly competitive smartphone and tablet market.

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  11. Thanks for the above responses.

    I remember reading in Barron's shortly after the March/2009 low, that the S&P would rise to 1250,...and some thought 1300-1350. At that time, those numbers were thought to be impossible to reach.
    Well,...we reached those numbers.

    We know that QE doesn't really work anymore. Any bang we get out of it is less & less.

    I am sure there will be lots of rallies, and the 3rd year of the President's term usually is a good one for the market. But, perhaps the May high is the best it can do.

    Perhaps a moth has lightly landed upon that pond in China,...or was it a butterfly?

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  12. long time listener, fist time caller. I just wasted 30 minutes trying to post this jibberish on fucking yahoo skf. fuck those fucking assholes.

    europe: get the marshmellows ready

    two excellent stories this morning. First, from zerohedge, CDS exposure to greece is a mere $5B

    http://www.zer0hedge.com/article/debunking-some-myths-about-greek-cds-contagion-threat

    second, and most likely most importantly, on Mish's site linking to the Telegraph, european banks are running out of cash
    http://globaleconomicanalysis.blogspot.com/2011/06/uk-banks-abandon-eurozone-greek-pm.html
    http://www.telegraph.co.uk/finance/financialcrisis/8584442/UK-banks-abandon-eurozone-over-Greek-default-fears.html

    I assume we are at most weeks away from greece's government collpsing and most likely leaving the EU, printing its own currency, and leaving god knows who in charge of the country, probably the military. The entire EU begins a horrific meltdown at that point. the ECB starts printing euros faster than Ben can print dollars, liquidity is vaporized in a matter of months at most. Show me another likely alternative, I'd love to hear it.

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  13. Happy Fathers Day!

    http://www.zerohedge.com/article/happy-zero-hedge-fathers-day-2011

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  14. Happy Father's Day to all here! Just surprised no comment on the OTC ban on gold/silver trading...trying to sort out its meaning other than obvious Control...welcome Abbie Hoffmann, good to see you here.

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  15. Happy fathers Day all, and especially Red, this song is for you:

    http://www.youtube.com/watch?v=E-vaysmfRnY

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  16. kli,

    When it comes to our buddy Red, in vietnamese:

    "Ba" - father
    "Mẹ or má" - Mother

    people in the rural in the north part often address as
    "U" - mother
    "Thầy" - father

    Sometime how children address their parents are passed down from generation to generation in the family; therefore, they would address their parents differently in the family.

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  17. To steal a cramer-ism, you have NO IDEA, NONE of how fast technology is moving.

    So many disparate systems are now becoming integrated, distributed and automated. And sorry to knock you red, but distributed systems while carrying weaknesses of their own, are certainly more difficult to destroy or dismantle.

    You are not paying attention to the real issue from the current tech boom, and that's what to do with all the people being rendered useless.

    I don't disagree things get ugly, but we are in many ways in uncharted waters in human history and machines don't care about cycles, so hopefully you all focus on the ways in which this bust will be different to guarantee your own safety and prosperity.

    Case in point - lookee what Apple has done to RIMM, but watch what is about to befall Apple.

    Good luck all

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  18. Thanks for commenting Fitzy. You hit the nail on the head with the masses being rendered idle through technology, poor governance, misallocation or lack of allocation of capital to keep the social fabric held together. The top tier has engaged in a loot and pillage then setting up the sanctuary points when the SHTF, and then coming back to rule over whoever is left standing after the chaos.

    The distributed systems, mainly the 13 root name servers {not 13 physical but widely distributed for each one} are the inherent weakness of modern technology. Not trivial to take down but not very hard either, EMP pulse (solar flare or nuclear/emp weapons), coordinate hacking attack, or as simple as the governments shutting it down to maintain control. Banking and commerce hacks reaching a crescendo as electronic transactions are all suspect. Most advance items from ipads, the electric cars, and power plant turbines are dependent on a fewer suppliers as capital dries up.

    Not to mention a few manmade and natural disasters to put a monkey wrench in the JIT supply chain.

    As for Apple like facebook is saturated markets, with the big problem you mentioned before, jobs to buy the annual fad iterations. Recent pumps in IPOs like LinkedIn and Pandora give you an idea how capital is chasing utter crap.

    Try and stay safe in the upcoming times.

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  19. Fitz, I think it is very clear what to do with all the people rendered useless.....without derivatives to create faux liquidity through the faux housing market industry they have NOTHING. As Red indicated a retrenchment by the power will take place as the dust settles after an appropriate time and concomittent decimation......wash rinse repeat cycle will be complete of course. The surviving laundry will be in place to be worn again. If we don't go "Mad Max" then the other side may be explosive as synergistic technology advancements create an entirely new growth horizon. The countries best positioned to take advantage of these changes will be the investment opps.

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    ReplyDelete