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2nd Series 6: 9/1415

Introduction

There are some really cool benefits when one studies Economics for a lengthy period of time, both in an Education arena and especially in the real world. The biggest reason is that, after a while, one starts to recognize trends, develop one's own theories, test them against the “pros” - against the real world outcome and begin to hopefully come to see and predict with some sort of decent accuracy, events of tomorrow.

This kind of thing cannot be taught in my opinion and I have always admired those skilled enough and gifted with this rare ability. Men like George Soros, who at one point, early in his career, stated that he was himself shocked at his new and sudden ability to forecast events with an eerie and stark accuracy rate.

It was after that inflection point when men such as these start to really come into their own and succeed at whatever it is that they do. In the case of Mr. Soros, he was able to turn this vision, this gift to accurately predict future events into billions of dollars and the highest long term rate of return second only to Warren Buffet, roughly 20%. No man has come close to that return over a very long term period, roughly 40 years.

That said, as a young man in college I remember going to Barnes and Noble's and just sit there or hours and read any books I could find on the 3 men at the time who seemed to be able to stay ahead of the curve by seeing trends nobody else saw and predict future events nobody else in the world could.

At that time the 3 biggest names were Warren Buffet, George Soros and Peter Lynch. Peter Lynch was more of a keen observer into human behavior or consumer behavior but his ability was unique enough that, at that time, nobody else seemed to actually get it the way he did. So perhaps that's not the same gift as that of Mr. Soros.

And in reading about Warren Buffet, his approach was quite simple and straight forward: invest in or buy out cash cows such as Geico and use those massive cash-flows to invest in undervalued assets which you could easily see would be around and in the leader in their market a decade or more down the road. One could argue that Mr. Buffet's ability could be duplicated and for the past decade or so there have been a few guys who have done exactly that and so far have matched his roughly 20% yearly return average.

Then that leaves only Mr. Soros with what I consider a special gift. To really get a feel for and develop an instinct which allows you to consistently predict the future in regard to your profession - in this case, making massive amounts of money by staying one step ahead of everyone and in Mr. Soros' case, he's usually more like three steps ahead of everyone else.

And there's simply no plausible, easy to understand explanation for this phenomenon. Where Peter Lynch's and Warren Buffet's investing protocol can be fairly easily copied, I don't see anyone out there with the ability to do what Mr. Soros has done - there are no prophets of profits, if you will.

Market Crashes: The Past

I have never forgotten the books I read about Mr. Soros and I always had a deep desire to develop a similar instinct, on any level and with any intensity. Unfortunately, what I found out was that no amount of education and no amount of wishing or intelligence would gain a person such a skill or gift. The real proof of that is the fact nobody has ever been able to copy Mr. Soros' talent and success for any prolonged period of time and there are many whom are much more educated and have much higher IQ's than Mr. Soros.

Therefore, I'm inclined to believe the source of such a talent, if it can be gained, lies somewhere else besides the conscious mind or the books we read in an attempt to accumulate knowledge. And it's something that happens all of a sudden and perhaps without even looking for it as Mr. Soros testified to it in one of the books written about him, and my favorite book which I read regarding all of these gifted men: Soros on Soros. He stated in this book that it happened all of a sudden - one day he simply started making prediction and he was startled at how accurate they were and this gift has apparently never left him.

When one cannot gain such vision into the future however, one should still attempt to predict future events based on various factors. The biggest predictor of the future is oddly and ironically, the past itself. If one studies history with great care, you begin to see repetition, trends and stark similarities in the world and age we live in today. Perhaps this is true because people are always the same so then their behavior would be similar given certain social, economic or political environments. For example, one can accurately predict events based on human greed or fear. In much the same way people behave similarly given similar conditions which may have existed in the past.

With this in mind, I took a look at all the major stock market crashes which have occurred in the United States since we've had a stock market. In looking at these market crashes I saw some unexpected trends which look so uniform in nature that one is tempted to think these were all predetermined by someone. Obviously that's not possible given the wealth destruction for the rich and poor alike in some of these crashes, but there must be some plausible explanation why there would be such similarities and an almost predictable nature to these events. And if one cannot find an explanation then perhaps at least try and predict the next big crash based on the similarities and correlations of past crashes.

A quick glimpse of all the past major stock market crashes:

1) Stock market crash of 1929: October 29th, 1929 - Black Tuesday.

2) Stock Market Crash of 1987: October 19th, 1987 - Black Monday.

3) Stock Market Crash of 1997: October 27th, 1997 - Black Monday.

4) Stock Market Crash of 2001: September 17th, 2001 - Black Monday.

5) Stock Market Crash of 2008: September 29th, 2008 - Black Monday.

6) To Be Determined….September 14, 2015 - Black Monday?

Market Crashes: The Future

I couldn't help but notice the correlation and similarities between the above crashes. And I did not look at all the corrections of the past 100 years and pick out the ones I felt were crashes - as there have been close to 20 serious corrections which some can argue were also considered crashes. I simply went by memory based on what I learned in school and the above 5 market crashes, for whatever reason, were deemed, per my recollection, as more important or more sudden and devastating than the other crashes, most of which I never heard of before doing research on this subject matter.

Whatever the reason, I can't help but see similarities between all the dates above. And I will also mention that I did not look at all the corrections or crashes and choose ones that appeared to have characteristics, I simply went with the crashes I felt were the most prevalent and then afterwards, I looked at the similarities. The first 3 were all in October, Starting with a Black Tuesday.

Presuming 2 sets of 3 market crashes, as I've noticed in History that sometimes events tend to repeat in sets of 3, then I would infer that the next crash will happen in September as the last 2 were in September. Then I would have to choose a date which makes the most sense. Well, based on History, a Monday or a Tuesday makes a lot of sense, if there is a real case of similarity to these events.

Therefore I chose the 14th for a number of reasons, but the biggest reason was just a hunch, a feeling and then I looked for possible explanations or similarities to see if it fit in with the prior crashes. First of all, it's on a Monday so it fits with the current trend. Secondly, although it's nearly 2 weeks prior to the last crash of 2008, the actual date falls on the same event - the Jewish Holy Day of Tishri or better known as Rosh Hashanah. The only difference is that in 2008 it fell on the first day while in 2015, the 14th of September it will be the 2nd and Final day of Tishri. I'm really not sure if there's any significance to this other than a mere coincidence but it is something I noticed after I chose this date.

And then finally, the last thing I noticed when looking at this date, 9/14/15, was the fact that if you add up the last 4 numbers (1415) you get an 11, so then - the date becomes 9/11. That gave me chills when I noticed that and it may means absolutely nothing but in this guess the trend game this is exactly what you look for to confirm a theory or a prediction - correlations which may support a possible outcome.

Conclusion

Finally, looking at all of this through a macro economic lens - I have to say that I don't see how the current plan to keep borrowing and printing money can continue for more than 2 more years. It will be nearly a full decade of borrowing and printing money to the hilt - a some point there has to be exhaustion.

Also, looking at the never ending QE games, we are now toward the end of QE3 and soon to start QE4, in the next 2 years the economy should either totally collapse or look to be recovering in which case the QE's have to stop and nobody in this world knows what happens to an economy coming out of a near decade long addiction ridden, trillion dollar binge-fest.

I personally think we will continue to see massive increases in asset prices for the next 2 years as the next QE4 and maybe a QE5 will keep pumping trillions into the system. Oddly enough, just as I predicted about 2 months ago, Gold has been crashing and continues to go through my first target of $1,000 and as I predicted, it should hit $500 at which point I think the government will buy up the entire world's supply of gold, or as much as they can get. We are now at $1200 for Gold, as its downward spiral continues and nobody can tell me why this is happening as the original argument of wars and printing is no longer holding up. The wars are still going on and the printing is still just as bad but instead of Gold continuing higher it's actually coming down and coming down hard and it caught all the best hedge fund managers off guard.

If this is not manipulation I don't know what is. As more money is printed then Gold should be going higher not lower. As the government keeps pumping trillions in assets to prop up housing and the economy, Gold should keep going higher not crash. But as I wrote a couple months ago, Gold will plummet through the $1,000 mark and once that happens it will collapse quickly to $740 and soon after that it should hit $500 and all of this should happen in the next 2 years.

Meanwhile, if the dollar is seeing its last days there must be plans for a new currency. Well, if you're going to go through the country-wide and maybe global riots and some revolts you might as well do it right. And I can't think of a better new currency than a global currency, or at least a western world - India and Asia (including China and Japan) and what currency would give the government more power and control while benefiting global Multi National Corporations, Banks and to some extent individuals, albeit, at the cost of what's left of their individual freedoms, than a digital currency.

I think this is why China is actually endorsing and pushing Bitcoin on all its citizens, something it refused to do with its own QQ digital currency some 7 years ago, but now all of a sudden it thinks it's a good idea to promote a foreign, a US brand of a digital currency? None of that makes sense but then again, China has been vocal about wanting a one world currency for sometime and perhaps it sees potential in Bitcoin or in at least the idea of a digital currency. If china wants digital currencies to succeed so badly that it's risking undermining it's own currency then there must be a reason for it. I'm wondering if the US is next to push digital coins, to hype up Bitcoin and other crypto-coins, the way China did with their half hour show on Bitcoin on their CCTV channel a few months ago.

This is what I'm expecting and if one wants in on what should be the biggest, fastest and most explosive boom in all investments since the beginning of time I would recommend getting in on some digital coins now. Cause once the American public is aware of these opportunities and they start to mine and buy crypto-coins en masse, it will be too late for any late comers. Because in the end there is no way any government will accept dozens or what will most likely be hundreds of alternative currencies - it will most likely choose the best, most efficient and most popular one, tweak it to fit its needs and make that the replacement for the dollar. And since the Euro is in worse shape than the dollar this will be a welcomed answer for the Euro and if the western powers are in on it everybody else will fall in line with maybe a few exceptions such as Russia.

I realize these are some bold and out of this world predictions, but for me these are the most fun and entertaining ones. As crazy as they may sound, crazier things have happened in History which makes me believe that such things are indeed possible. If we do get the biggest market crash in history 2 years from now, on 9/14/15, or on whatever date it does happen on, then one can be sure the dollar will most likely not emerge from this biggest and perhaps final crash for the United States. The dollar has run its course and the current printing which seems to be approaching mind boggling levels cannot go on but since it is continuing one has to seriously wonder if there is a way out for the dollar and I am simply going with the most logical answer, which is: no way.

I hope to be proved wrong but unless something changes soon, if we keep going down this same path of monetary and fiscal irresponsibility then I simply do not see a better outcome than the one I've outlined above. In which case one should make the necessary financial maneuvering in preparing for the worst while expecting and hoping for the best.

- Maximilian Wilhelm


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