7 reasons the stock market could collapse in 2013 - 2014

7 reasons the stock market could collapse in 2013 - 2014 

Inevitability. When I saw this sequence of numbers: 42,13,4,2,1,1 - "I saw the inevitability of these numbers correspond to the number of months between Greedometer ® sequence a Greedometer sequence generated value is a conspiracy by the The Greedometer algorithm (is also a mini Greedometer algorithm). sequence starts, the S & P500 is to achieve a secular (long-term) peak. sequences continue through the stock market crash, until they € ™ and then by some of the truncated 

form of the significant financial and / or monetary policy to stimulate Here is an example: 

As someone who has repeatedly identified the U.S. stock market as secular peak (occurring within a few weeks), then saw a nascent crisis truncation, IA € ™ m Gunian Yong long bear labels, see the generated prediction Greedometer induced trampling government policy support. Many counter this form of advertising tank endless kick. This article will suggest not only kick the can come to an end, it seems to have done, so this month (or even this week). 

With a lame and incredible (untrustworthy) fiscal cliff patch in place, the rally has ended before Greedometer sequence, and re-ignite a new record time. Data here: 

At the red numbers. The amount of time between contractions Greedometer sequence. For those who appreciate the elegance of mathematics, you would like to know, this series features defined by a nearly constant decay rate is 69%. 

2007-2009 sequence and before it (2000-2003) between the start of 42 months. 

= 13 months fell by 69%, 42 months minus. This is the length of time until the next start of the sequence. 

= 4 months fell by 69%, minus 13 months. This is the length of time until the next start of the sequence. 

The next number in the series is two months. However, the Greedometer algorithm can only be accurate to within two weeks, so it is the value of two months within the error range is six weeks, four months of value may be 19 weeks. This produced a 69% decline in another. 

Termination of the series 1 and the value of 1. We have reached the limit, the accuracy of my algorithm. But more importantly, we have reached the end of the series. 

Data show that since 2000, this is a system in a constant state of decay. Of course, this means that the same problem has plagued the U.S. economy since 2000, but has not been determined. Interesting fact that the last entry in the series 1 and 1. This indicates the end of the series. There are three possible outcomes: 

A) not € ™ t any Greedometer sequence (not suitable for 35 years or so). The core issues facing the economy (too much debt) has been resolved. Fiscal cliff patch solves everything! The stock market is about to start another long bull run. 

2) We are faced with non-stop assembly, so like, we are in a very fast pace in the past have seen the collapse of six months. WEA € ™ re in the economy and the stock market purgatory need to continue unsustainable fiscal and monetary policy support. WEA € ™ re destined to rise and fall within the next few years, until the debt was finally straightened out. Alas! 

3) there is a final Greedometer, is about to start (this week or next) sequence. This time, brings us a final secular stock market bottom.

Let me suggest Option 1 is unlikely. Currently proposed fiscal cliff patch involves $ 1.8T in so-called deficit reduction over the next nine years. This is ridiculous. Here is our debt to gross domestic product looks like, nine years henceâ |. 

Now I do not know about you, but IA € ™ Mibo color we will not be this ugly. Our international bond buyers will stop showing up. The diagram assumes average annual real GDP growth of 0.8%. FYI: average GDP growth of 1.7% over the past 13 years, the requirements of Ts fiscal stimulus now reversed. It also requires $ TS currency steroids, may not continue past this year, because of food and fuel inflation will lead to quantitative easing will stop. Americans finally have to use their house as an ATM machine GDP beneficial aspects. 

You see, over the next nine years, what happened? 

In Option 2: Purgatory. Since 1989, it has happened in Japan. It could happen here. However, it requires sustained fiscal and monetary goodies. Last time I checked, the United States and Europe, is in the process of fiscal tightening will likely years. How long can a man central bank printing press? Obviously they are probably going to cause as much damage actions supposed € œwealth inflationary effect? Benefit. Abundance, and d represents the second round of quantitative easing do? 

As you can see, QE2â € ™ of $ 75B/month. In the Fed's balance sheet meeting the real world caused inflation to rise from just over 1% to nearly 4% in 10 months. Granted QE3, QE4 arena taccompanied by helpful, by the same level of financial policy, but $ 85B/month can easily cause some point in early 2014, because of a 5% inflation, we start again from 2% than 1%. I suspect that the Fed will begin to shrink or stop QE noise before this happened. Recent Fed minutes seem to indicate that there have been some such thoughts. So no, I do not see Option 2 is feasible, because if things do not € ™ t last forever, it will not .

This makes the selection 3. Essentially, this is a much credibility? Leta € ™ s forecast U.S. stock market, global stock markets and risk assets have suffered various forms of another immortal drop € ", this decline may be initiated by the peak, this month. Examineâ. 

In 1881-1999, 119 years may have been 3 Greedometer sequence. 

However, we have seen 6 Greedometer sequence since 2000, is about to start the seventh. Previous six sequences, each a huge fiscal and / or monetary steroids, so that more can be kicked down the road is truncated. These sequences are truncated at different points in their collapse would cause some (most) misinterpreted horse € ™ s happening. Each sequence is bound to reflect the stock market plunged more than 60% (2007-2009 saw the collapse of the S & P 500 index fell 57 percent, and then stopped fiscal and monetary support) damage. 

Some only 10% or 20% drop occurs stop these sequences to create a false sense of security, "the government's fiscal and monetary policy measures will be able to continue to play it down, they have the ability to prevent another stock market collapse and economic recession. above chart shows there ™ SA 130 + year history of the U.S. spot market, where P / ê ratios mean recovery, and that we € ™ re likely to see on a Standard & Poor's 500 Index cyclically adjusted P / ê in 2013 or 2014, dropped to 6-7 range. 

Let us look at what is 7 handles look like. The current P / E of 22.5, while the S & P500 is 1466 (January 10, 2013). 

1466 The 7/22.5 = 456. Ouch! 

133-year mean reversion is very credible. In fact, there is an element of inevitability. Thus, the highest probability option 3. 

Before closing, let me leave you these facts. S & P500 celebrate a new financial crisis, today's high. This is the December 2007 has been the highest since the index. Great. Now magnified about your point of view. Here is your LL SEEA |. 

S & P500 is that it is in December 1999. 13 years of epic volatility and did not return excluding dividends. You will be more, pay less and see the magnitude of the order less volatile money market funds, although they have been paid since 2008, almost none. I think the S & P 500 index will again see these levels in a few years time. For those who think this is a 13-year stretch of events, I have this to convince you otherwiseâ. 

S & P500 index from October 1968 to July 1982 to deliver nothing but the volatility and dividends. Nearly 14 years of treading water filled with panic. FYI: Start redlining may Greedometer early in 1966 when the P / E peaked at 24, and in 1968 the S & P500 index peaked "€" a few months ago in the summer to stop redlining. Since my data only extend back to January 1999, I can not verify Unfortunately, this estimate. 

For comparison purposes, the Greedometer start redlining 11 months ago S & P500 index peak in October 2007 to stop redlining three months ago the market peak. In the crisis of 2000-2003, Greedometer in December 1999 began redlining € "the first eight months, beginning in the 2000-2003 stock market crash.