Stock Market thread


Gold Member

The Fallacy of “Pent-Up Demand”
The question for the economy going forward is whether the $9 trillion of combined fiscal and monetary stimulus laid the foundation for a sustainable recovery, or whether it was a bridge loan to help struggling businesses and workers until the pandemic was over in August and the economy could reopen to accommodate “pent-up demand.”

Unfortunately, August has come and gone and the pandemic is still with us. So-called pent-up demand is nowhere in sight; many job losses during the March-June pandemic peak wave appear to be permanent, not temporary. Many businesses have shut their doors forever and jobs associated with those businesses are not coming back. The $9 trillion bridge loan looks like a bridge to nowhere.

The economic impact of the response to the pandemic will play out over years, not months. Some research shows that it takes thirty years or more to normalize an economy after a pandemic of this magnitude. That research is based on fifteen major pandemics over the past six-hundred and fifty years starting with The Black Death.

A thirty year normalization period is also consistent with the impact of the Great Depression of 1929-1940, which continued to exert a strong influence on the economy and behavior until the late 1960s.

In any case, we’ll have ample time to discuss the economy and the impact of the pandemic in the coming year. For now, we must pivot back to our original topic – the election of 2020 and its impact on your portfolio and investments.

To do this we first provide a snapshot of the state of the race today, then do a deep-dive on predictive analytic models to forecast a winner, then finally consider several wild cards that could appear before election day and turn the models upside down. The one forecast that is certain is that the next two months will be a wild ride.

The State of the Race
In the national polls, Biden has a 7.6% lead over Trump as of August 23, 2020. (All of the polling and betting data in this edition come from the RealClear Politics website, which uses an average of many different polls to arrive at its published results).

The betting odds show Biden as a 55.7% favorite compared to Trump’s 43.4%. The electoral college map shows Biden with 212 solid electoral votes compared to 115 for Trump, with 211 electoral college votes in the “Toss up” category and 270 needed to win.

In the twelve toss-up battleground states, Trump has a solid lead in Texas, and slight leads in Georgia, Iowa, and North Carolina.

Donald J. Trump is trailing in national polls and most battleground state polls with 70-days left to election day. However, when polls are adjusted for sample skews and differences between respondent intentions and expectations, Trump is a slight favorite. In any case, this promises to be a close and contentious election.

Biden has solid leads in Wisconsin, Minnesota, Florida, Michigan, Pennsylvania, and Nevada and a slight lead in Ohio and Arizona. In the favorability ratings, the Democrats have a 13-point advantage over the Republicans.

If all of the toss-up states were awarded based on polling leads as of August 23, Biden would have 337 electoral votes compared to 201 for Trump. Since 270 electoral votes are needed to win the White House, this outcome amounts to a prospective landslide victory for Biden.

Taking into account national polls, battleground state polls, betting odds, favorability ratings and other objective criteria, it appears that if the election were held today Biden would be the clear winner and it would not be a close election.

My forecast is that Trump will win on November 3.

How can I make a “Trump wins” forecast in the face of overwhelming polling, betting and favorability data that shows Biden will win? There are two parts to the answer, both explained in more detail below.

There’s More Than Meets The Eye In Polling
The first part is about the polling data itself.

The polls are badly skewed for a number of reasons. Once adjustments are made for oversampling Democrats and polling “all adults” instead of “likely voters”, the polls are actually much closer than the published results.

The second part is that polls are a snapshot. We watch the movie. Where we are today does not necessarily bear much resemblance to where things will end up in November.

To illustrate that point, just compare today’s data to where things stood on this same date in 2016. In late August 2016, the Democrats led the battleground state polls by 5.3-points. Today that lead is 4.2-points.

The Democrats were ahead in both cases, but the lead was actually bigger in 2016 than it is today. Of course, Trump won in 2016 despite that lead in August. Trump is in better shape today than he was at this stage of the race in 2016.

Joe Biden is in his third presidential campaign having failed in his two prior efforts. Will the third time be a charm? Biden has significant leads in most polls and is almost certain to take several large electoral prizes including California, New York, Illinois and New Jersey – a locked-in advantage of 110 electoral votes toward the 270 total needed to win. But, Biden’s support is tepid and he may be in jeopardy in critical battlegrounds such as Michigan, Ohio and Florida.

The same is true in the favorability ratings. In late August 2016, the Democrats led in favorability by 19.2 points. Today, that lead is 13.0 points. The Democrats were ahead in 2016 and are ahead in 2020, but the lead is narrower today. If Trump could overcome a 19.2-point lead then, he can overcome a 13-point lead.

The Democrats do look stronger in the national average polls. They had a 4.3-point lead in 2016 and today that lead is wider at 7.6-points. Still, it’s important to bear in mind that national polls don’t matter because the U.S. does not have national elections.

Instead we have 51 separate elections in the 50 states plus the District of Columbia. The national poll lead reflects huge voter support for Biden in states like California and New York. Hillary Clinton beat Donald Trump by 4 million votes in California in 2016. Biden may beat Trump by an even wider amount in California in 2020.

The problem is you can’t win California twice; you can only win it once no matter how many extra votes you receive. Every vote for Biden in California over 50.1% is a wasted vote (the same is true in New York).

It does seem highly likely that Biden will win California and New York, but the huge excess popular vote in those states won’t do him any good in battlegrounds like Michigan, Ohio and Pennsylvania. That’s why national polls don’t matter while battleground state polls matter a lot.

Looking just at the battleground states, Trump is polling better today than he was at this stage in the 2016 race. That’s a very good sign for Trump.

The other aspect of the polls that is good news for Trump is that the gap between Biden and Trump is narrowing and moving in Trump’s direction. While Biden maintains a lead by most measures, Trump is gaining and is within the margin of error in many of the battleground states where Biden is ahead. This trend towards Trump has been noticeable in the past two weeks.

Polls will likely move more in Trump’s favor because polling works with a lag. I have actually commissioned polls for a potential presidential candidate from one of the top polling firms in the business. This gave me an excellent look at what goes on behind the scenes.

It takes days of discussion between the candidate’s advisors and the polling firm to establish just what the candidate’s strengths and weaknesses are. That’s important because if you don’t ask polling questions on the weaknesses, you create a blind spot your opponent is sure to exploit.

Then the polling firm has to devise the questions, which you review. Next the polling begins, but it’s a laborious process because the pollster has to work hard to get a representative sample of the likely voters.

Many people who are called just hang-up or won’t participate, so you make five or six calls for every one who participates and you need over 1,000 participants to have a statistically valid sample. Finally the results are processed by the polling firm and reviewed with the candidate before the poll is considered final.

In short, a well-constructed and valid poll can take two weeks from start to finish. The results may be solid, but they are out-of-date by the time they are final. This means that polls we are seeing today may have been conducted around August 15. We won’t see the polls conducted today until around September 1. If the trend was moving in Trump’s direction two weeks ago, don’t be surprised to see much better results for Trump a week or two from now.

Why I Predicted Trump Would Win in 2016
In a series of television interviews in October and early November 2016, I predicted Donald Trump would defeat Hillary Clinton in the presidential election. These were not tentative or wishy-washy forecasts; I was categorical that Trump would win and I gave the TV anchors specific reasons why this would happen.

My forecast came at a time when Hillary was ahead in all of the polls, when betting markets were giving her a 90% chance of winning and when pundits like Nate Silver and those at the New York Times were giving Hillary odds of winning at 93%.

The TV anchors would turn pale or gasp for breath when I gave my predictions, but they were kind enough to give me time to explain why the polls were skewed, why betting markets are not good predictors of political outcomes and why anecdotal evidence (which I had gathered on road trips in Spokane, Washington and the Ozark Mountains) all pointed in Trump’s favor.

In fact, my forecast was not a lucky guess. It was based on a rigorous model. My model used complexity theory, behavioral psychology, history and applied mathematics, especially Bayes Theorem, both to shoot down the “Hillary wins” narrative and to build the case for Trump from the ground up.

The first step was to reverse engineer the polls to get at a more accurate result. Polls typically showed Hillary with a five to seven point advantage nationally and about four points in some of the swing states. Based on polls alone, that would indicate a landslide victory for Hillary. But, the polls were badly skewed.

In polling, you must decide if you’re going to poll all adults, registered voters only, or likely voters only. It’s easier and cheaper to poll all adults, but that’s not a good sample of those who actually vote since almost half of American voters don’t vote.

Polling registered voters is better, but even that sample is flawed because many registered voters don’t vote either. Polling only likely voters is the most accurate method, but it’s expensive because you have to screen out many points of contact and you have to ask more questions before you can make a determination that someone is a “likely” voter.

The second step is to decide how many Democrats, Republicans and Independents to include in the sample. There are more registered Democrats than Republicans so it makes sense to include more Democrats in the sample. But, how many more?

Many pollsters were including, say, 58% Democrats and 42% Republicans (ignoring Independents for the moment). The actual skew is about 54% Democrats and 46% Republicans.

By oversampling Democrats, the polls are rigged to favor the Democratic candidate. (By the way, you can discover this information if you look at the polling company press release and appendices, not just by reading the headline numbers in the media. Most people don’t bother to get into this level of detail).

Once you know these flaws, you can reverse engineer the result to produce something closer to an accurate poll. In late October 2016, polls showing Hillary with a four-point lead were actually showing Trump with a slight lead once you adjusted for the sample skew. That was an important clue that Trump would win.

Betting on the Election
Betting odds are also easy to reject as a reliable guide to election outcomes. The reason is that bookies are not dopes. Participants are betting real money. A bookie (or the computer equivalent) does not set odds based on whom he expects to win; he sets odds based on the weight of money. If a lot of money is betting Hillary will win, the bookie will give Hillary short odds and Trump long odds in order to make a spread regardless of who wins.

There’s good evidence that because college-educated voters favor Democrats more than all voters, that betting markets reflect higher-income participants who make more money (because of college) and therefore bet more money in accordance with their biases (because they can afford it). The problem is that in a voting booth, money doesn’t matter. You get one vote whether you went to college or not and whether you are rich or poor.

Betting markets provide useful information if you can discover the number of actual bets for one side or the other. My advice for analysts is ignore the odds and ignore the money; just count the number of bets. That’s much more like the number of votes on election day. If you made that adjustment in 2016, you could also see that Trump was slightly ahead.

Finally, betting markets are easy to manipulate. If George Soros sponsored groups can spread tens of millions of dollars around to support far-left causes (they do) then it’s just as easy to divert some of that money to paint the tape in the betting markets. That’s one more reason to discount what the betting markets say.

In addition to reverse engineering the polls and deconstructing betting odds, I also rely on anecdotal evidence. Professional statisticians don’t use anecdotal evidence because it’s difficult to quantify and plug into standard models. But, elections are about the behavior of real people and anecdotal evidence is the best indicator of what real people are doing. It may not be quantitative, but it is highly revealing especially if you keep an open mind and look at both sides.

The Power of Observing Real People
In the summer of 2016, I took a bus ride from Spokane to Moses Lake in central Washington State. A lot of my fellow analysts are flying around in private jets or glued to their computer screens.

A four-hour trip on a Greyhound bus is a great way to make contact with everyday Americans and observe their farms and neighborhoods. I saw row after row of Donald Trump for President signs in some towns and none for Hillary Clinton. That’s not a scientific poll, but it was good evidence that Trump has struck a chord with the American people and was going to outperform expectations.

All of these techniques apply today. The polls are still skewed (but can be reversed engineered). The betting odds are still stacked by the weight of money (but can be adjusted once you know the number of bets not the amount of money per bet). Anecdotal evidence is still ignored, but it’s available and extremely powerful.

The other day I looked out on the Piscataqua River that forms the border between Maine and New Hampshire. I saw a motorboat proudly flying two American flags and a large “Trump for President” flag. I have yet to see any Biden banners on any boats anywhere.

In addition to my proprietary models, there are other models that are pointing in favor of Trump. One model, which we discussed at length in last month’s issue of Strategic Intelligence, involves the difference between “intention” and “expectation” in polling results. Pollsters ask respondents whom they intend to vote for. That’s the question that gets the headlines and that’s the question pollsters refer to when they say Biden has a four- or five-point lead.

But, pollsters also ask whom the respondent expects to win regardless of whom they are voting for personally. A polling subject can say, “I’m voting for A and I expect A to win.” But, the subject can also say, “I’m voting for A, but I expect B to win.”

It turns out that over many decades and many thousands of elections and polling questions, in cases where the intention and expectation questions produce different results, the expectation question predicted election outcomes with 78% accuracy while the intention question only had 22% accuracy.

The reason for this has to do with the fact that the individual intention question has a sample of one person – your opinion. But the expectation question has a sample of perhaps 50 to 100 people because when you answer it you’re synthesizing the views of everyone you know – family members, co-workers, neighbors and friends.

A scientific poll might have 1,300 respondents; that’s considered a solid poll. But the same 1,300 respondents will give you a sample of 50,000 or more once those 1,300 respondents synthesize the views of everyone they know. A sample of 50,000 is huge and highly accurate with a low margin of error.

Right now, Trump is beating Biden 55% to 45% in the expectation question even as Biden leads Trump 50.0% to 42.4% in the intention question. Data shows that when the expectation and intention answers vary, the expectation has more than three times the predictive power. That’s a huge factor in Trump’s favor.


Gold Member

Does The Lichtman Model Work This Time?
Another model that is considered to have more predictive power than most other models or polls was invented by Professor Allan Lichtman of American University with a collaborator.

This model is referred to as “The Keys to the White House.” It consists of thirteen factors (called “keys”) which can be applied to the party in power to yield binary true or false answers. If the party in power gets at least eight true answers, they win the election. If the party in power gets seven or fewer true answers, they lose the election. That’s it.

Some background is in order. Lichtman is often introduced as the forecaster who has never been wrong and has correctly predicted every presidential election since 1984. That’s not quite right.

In 2000, Lichtman predicted Al Gore would win. In fact, George W. Bush won the election. Lichtman and his supporters then clarified that his model predicted winners in the popular vote, not the electoral college. (The two are almost always the same, but in 1824, 1876, 1888, 2000 and 2016, the winner of the popular vote did not win the electoral college and did not become president).

Fine. But if we say Lichtman was right in 2000 because Gore did win the popular vote, what do we say about 2016? Lichtman predicted Trump would win the election, but Hillary Clinton won the popular vote by 2.8 million votes or 2.1% of the total votes cast.

If we give Lichtman credit for his 2000 call, then we have to say he was wrong in 2016 because Clinton won the popular vote. If we say Lichtman was right in 2016 because Trump won the election, then we have to say Lichtman was wrong in 2000 because Gore didn’t win the election.

Lichtman’s explanation is that he was right from 1984 to 2000, but then “switched” to electoral college forecasting rather than popular vote forecasting. That’s fine too, but then his track record is not unbroken for 36 years because he switched methodologies.

That said, Lichtman deserves credit for inventing a sound model whether it has a perfect track record or not. His model still seems to produce more accurate results than almost all of the alternatives.

Here are the thirteen keys according to Lichtman:

The incumbent party holds more seats in the House after the most recent mid-term election than it did in the previous mid-term election.
The incumbent did not face a serious challenge for the nomination.
The incumbent party candidate is the sitting president.
There is no significant third-party challenger.
The economy is not in recession during the election campaign.
Real annual per capita GDP growth during the president’s term exceeds mean growth during the prior two terms.
The incumbent party effects major changes in national policy.
There is no sustained social unrest during the incumbent’s term.
The incumbent is untainted by major scandal.
The incumbent administration suffers no major failure in foreign or military affairs.
The incumbent administration achieves a major success in foreign or military affairs.
The incumbent-party candidate is charismatic or a national hero.
The challenging-party candidate is not charismatic or a national hero.
Part of the attraction of this model is that it does not depend on polls, conventions, debates or the notorious “October surprise.” In fact, this model can produce accurate forecasts as much as a year in advance of the election because many of the questions posed can be answered definitively far in advance of election day.

The problem is that these questions don’t always have accurate answers or answers that easily escape selective biases based on partisan perspectives. Trump may seem charismatic to his blue-collar fans and supporters, but may seem merely buffoonish to his college-educated urban detractors. Still, you have to answer the questions in order for the model to produce results.

With those challenges in mind (and a strong dose of humility), here are the answers:

False (Republicans lost control of the House in 2018)
True (Trump had no primary challengers)
True (Trump is a sitting president)
True (There is no significant third-party challenge in 2020)
False (The economy began a new recession in February 2020)
False (Growth from 2017-2020 will be less than 2009-2012 and 2013-2016)
True (Trump has achieved major tax, trade, immigration and prison reforms)
False (There has been major social unrest starting in May 2020)
True (Trump has been accused of many scandals, but the accusations are false)
True (There have been no major foreign policy failures)
True (The Israeli-UAE peace treaty is a world historic achievement).
True (Trump must be regarded as charismatic even though he is widely disliked)
True (Joe Biden is no hero and is one of the least charismatic figures on the scene).
Based on these answers, Trump has nine True ratings and only five False ratings. Accordingly to Lichtman’s rules, if the incumbent party gets eight or more True ratings, they win. At least under this interpretation of Lichtman’s Keys to the White House, Trump should be reelected to a second term in office.

Of course, these answers are debatable. Some Trump critics might flip Number 9 to False because of impeachment and Number 12 to False on the “Trump is a buffoon” theory. The answer to Number 11 is certainly True but it has not received that much attention despite its importance.

It’s also not clear how robust Lichtman’s model is at a time when the country is experiencing the worst pandemic in over 100 years and the worst depression in over 80 years.

It’s true that the economy is in a recession (Number 5), but the recession was due to the pandemic, not to any economic policies pursued by Trump. If the public blames the pandemic and not Trump for the recession, then that factor might be less important than in times past. Likewise, the social unrest we are experiencing (Number 8) arises under Democratic mayors and governors and Trump is widely perceived as trying to stop it. A perception as a “Law and Order” president could help Trump as it did George H. W. Bush in 1988.

My view is that the Lichtman model predicts a Trump victory, but the matter is not free from debate. Interestingly, Lichtman himself used his own model to predict a Biden victory, but that was before the Israel-UAE peace treaty, so Lichtman has Number 11 as False. I publicly asked Lichtman if the peace deal would change his forecast but have not received a reply.

Under any interpretation, the model predicts a close election. If Lichtman’s original application of the model as a predictor of popular votes rather than electoral votes still applies, and allowing for Lichtman’s view that Biden will win, it could certainly be the case that Biden would prevail in the popular vote while once again Trump wins the electoral college and wins the White House. That would come as no surprise.

Wild Cards
Sophisticated predictive analytic models are all well and good, but no model can easily take account of highly unusual shocks that may emerge in the unprecedented circumstances we face today. We’ve had pandemics before and we’ve had depressions before, but we’ve never had both at the same time with social unrest and a presidential election thrown in for good measure.

Investors need to be on guard against one or more of these emergent properties that can come without warning. We call these the “wild cards” in the election season. It’s hard to know which one might emerge, but it’s not hard to forecast that at least one of them will. Investors should prepare accordingly.

The Replacement of Joe Biden
The first wild card is the potential that Joe Biden will be removed from the ticket in the next few weeks and replaced by a more acceptable candidate, possibly New York Governor Andrew Cuomo. This is not as far-fetched as it sounds.

Biden is suffering acute cognitive decline. Whether this is dementia, early-onset Alzheimer’s Disease, or the result of Biden’s two aneurism-related neurosurgeries in the 1970s is hard to say without direct medical examination. Still, the cognitive impairment is obvious based on Biden’s vacant stare, confused demeanor and his inability to form sentences, complete thoughts or to stay on topic.

The Biden campaign strategy so far has been to keep Biden under wraps and stuck in his basement. He does not do press conferences and his few interviews involve soft-ball questions and pre-scripted answers. Policies aside, the thought of Biden having to react in the midst of a crisis or a war will embolden America’s enemies and should chill Americans to the bone.

The crunch will come on September 29. That’s the date of the first presidential debate. Trump is a skilled debater with excellent command of the facts. He easily bested Clinton in 2016 and will do the same if he faces Biden. The real problem is not whether Biden can win a debate (he can’t); it’s whether he can stand on the stage and speak and act coherently. Even with rehearsal and medication that will prove exceedingly difficult.

The Democrats’ only options are to replace Biden before the debate (which can be done at the DNC level without new primaries or a new convention), cancel the debates, or go ahead and hope for the best.

The candidate replacement option not only solves the debate problem, it also gives the Democrats a better chance of a win in November. Cancelling the debates (no doubt by playing the COVID-card) is a solution but it carries its own costs and highlights the problem (cognitive decline) it was meant to solve. Letting Biden go onstage live with Trump may be the riskiest choice of all.

There are no good solutions to having a mentally impaired candidate. Any one of the above choices sets the race up for an unexpected shock, especially since Biden’s condition has been largely covered-up by a compliant media. Investors should brace for a shock on this front in the coming weeks.

Mail-in Ballots
Another shock-in-the-making is election day chaos resulting from the surge in mail-in ballots. These are not traditional absentee ballots that have long been used and have proved useful. This involves tens of millions of mail-in ballots intended to replace polling places and voting booths.

We can leave aside the issue of fraud in mail-in ballots (that’s a big issue but will likely not arise on election day itself; it can take weeks or months to identify and investigate such cases). The immediate problem is counting the ballots. Many mail-in ballots arrive at the last minute or even after election day. There will be issues concerning postmarks, matching signatures, timely delivery and the sheer time it takes to open the mail and visually inspect each ballot.

This mail-in ballot chaos won’t matter in states such as California or New York where Trump has almost no chance to win. The mail-in ballots will affect the final vote count but they won’t affect the election winner because those states are solidly in the Biden column.

But, it could be crucial in swing states such as Michigan where Trump won in 2016 by 10,700 votes, and where millions of mail-in ballots are expected to be cast. What this means is that the election will not be decided on election day; it may take days or weeks to count the ballots and announce the winner in key states that will determine the electoral outcome.

Both sides are gearing up for this. The Trump and Biden campaigns have hired over 600 lawyers each to fan out across fifty states on election day demanding court orders on extended voting hours, impoundment of mail-in ballots and mandatory injunctions against certifying results.

Neither side will concede the election until these legal contests are resolved. A similar stalemate ensued in the 2000 election between George W. Bush and Al Gore. But, that was confined to a few counties in a single state, Florida. This stalemate will involve perhaps seven to ten states, all crucial to the outcome.

Two-time presidential loser Hillary Clinton added fuel to this fire by telling Showtime: “Joe Biden should not concede under any circumstances because I think this is going to drag out.” This reveals the Democrats are already preparing for election day chaos.

The recent Democrat hoax about supposed efforts by the U.S. Postal Service to remove mailboxes to frustrate mail-in ballots is laying the predicate for election day charges of malfeasance. The reality is that mailboxes are routinely relocated for normal logistical reasons and the vast majority of mailbox relocations were done during the Obama administration.

The Chaos After Election Day Is Coming
Is there anything on the horizon worse than chaos on election day? Yes. It’s the prospect of chaos on the day after.

The Marxist Black Lives Matter faction and the neo-fascist Antifa goon squads are preparing for a possible Trump victory. For them, it will be a vindication of their view that American democracy is inherently flawed and the only solution is to destroy the system and start over.

The destruction will begin within 24 hours of a Trump victory in cities all over America. The riots and looting in Portland, Seattle, New York, Chicago and other major cities are just a warm-up for what will happen in the aftermath of a Trump victory.

The bottom line for investors is that the next 70 days will be among the most volatile in U.S. political history. An uncertain election outcome with extreme differences between the candidates would be enough to cause market volatility.

When one factors in a possible candidate switch, Biden’s cognitive decline, a delayed result due to mail-in ballots, refusal to concede the outcome, coast-to-coast election litigation and widespread riots, investors are facing a minefield of hidden dangers and catastrophic outcomes.

Cash will preserve wealth and reduce portfolio volatility. Gold will provide a built-in hedge to adverse outcomes. Reductions in equity allocations will also reduce investor exposure to this litany of unexpected and shocking outcomes. In addition, read below as Dan analyzes a trade opportunity for your portfolio.

Considering polling trends, polling skews, prediction market skews based on the weight of money, anecdotal evidence, proprietary models, the intention v. expectation polling divergence, the importance of battleground states, and the Lichtman model, the weight of evidence supports the conclusion that Trump will win a second term on November 3, 2020.

Still, we have 70 days to go until the election and a lot can happen. All forecasts (including my own) require updating based on new data. I’ll be doing that continually between now and November 3 and keeping Strategic Intelligence readers informed of any significant changes in the forecast.

After this issue, we have two more issues before election day. The November 2020 issue should arrive in your in-boxes or mailboxes about a week before Election Day. We’ll give you our final forecast by then in time to make any portfolio adjustments needed to account for surprise outcomes or a contested election.

The “wild cards” we describe above will be in sharp focus by then along with the latest polls and the output of our proprietary models. This will be a close race regardless. Right now Trump is ahead. We’ll see how he finishes in the stretch.


Tesla seems to be quite the bubble, it's market cap is larger than all other manufacturers combined. More than 2x Toyota.

I don't get it, never did. I still don't see Teslas on the street. I did tell a friend a couple years back who believed in it that I would get in if he did, but he never got in , and neither did I.

Market cap of publicly traded car manufacturers, as of Sept 1:
Tesla $443bn
Toyota $185bn
VW $86bn
Daimler $54bn
Ferrari $49bn
BMW $46bn
Honda $44bn
General Motors $43bn


It's sinking today. Still, I think overall it'll continue it's ascension on hype. Quite the bubble, indeed, though there are companies that are literally bringing in zero dollars - no revenue whatsoever, just hope and faith in "the data" - valued a multi-billions, I guess at least Tesla is selling something successfully.


^^ Watch out trying to catch a falling knife!

APPL now has a market cap of 2.25 TRILLION. I know more people in the world have these iPhones, but I just don't get how this works. Will their smart phones be selling for 2K instead of $600 now?


Gold Member
Tesla announced today they will sell up to $5 billion worth of stock. A quick search said their debt is around $11 billion so this stock sale could wipe out almost half their debt.


Tesla seems to be quite the bubble, it's market cap is larger than all other manufacturers combined. More than 2x Toyota.

I don't get it, never did. I still don't see Teslas on the street. I did tell a friend a couple years back who believed in it that I would get in if he did, but he never got in , and neither did I.

There are a decent amount of Tesla's vehicles on the street depending on where you live. I've seen many in New Jersey and I know electric car sales have been good in Cali.

I think buying one is waste but everyone I've talked to that has test driven it, loves it. Its also a symbol of wealth.
It's sinking today. Still, I think overall it'll continue it's ascension on hype. Quite the bubble, indeed, though there are companies that are literally bringing in zero dollars - no revenue whatsoever, just hope and faith in "the data" - valued a multi-billions, I guess at least Tesla is selling something successfully.

Companies would rather hold their money in tech stocks which are a store of value than hold cash which governments are guaranteed to inflate big time.


Gold Member
These valuations are absurd but I have no sense for the market as it defies common sense. I was actually going to withdraw everything on Wednesday but didn’t pull the plug. Then again I did the same thing last spring.

I read an interesting article somewhere that you should basically buy stocks in January and sell them at the end of summer. If you did this with the DJI and look back historically you would boost your gains by a good amount.


These valuations are absurd but I have no sense for the market as it defies common sense. I was actually going to withdraw everything on Wednesday but didn’t pull the plug. Then again I did the same thing last spring.

I read an interesting article somewhere that you should basically buy stocks in January and sell them at the end of summer. If you did this with the DJI and look back historically you would boost your gains by a good amount.
There is a case for pulling out money and investing right after the election. Lots of uncertainty with elections.


Gold Member
Updated Quarter S&P Futures Chart projections:

Wave 1 0 low June 15 2923.75 1 High 3156.25 June 20 = 232.5

Wave 2 low 2983.50 June 29 = 173

Wave 3 high = 3587 Sept 02

Wave 3 minus Wave 1 low = 3587-2923.75= 663.25 Full 1 to 3 move

Wave 4 Corrects in either 4 = 2 or 4 = .38 times full move of 1 to 3
Wave 4 (2 - 4) 3587 - 173 = 3414
Wave 4 (.38 X 663.25 Full 1 to 3) or 3587 - 252 = 3335 target.
Wave 4 actual low 3347.75 or 239.25 or .38 further than 173
Wave 4 likely to finish testing 3335.

Wave 5 either ..618 times Wave 1 or Equal to wave one
Wave 5 .618 of Wave 1 = 144 Equals Wave 4 target low
3335 + 144 = 5 possible .618 target = 3479 "failed 5th or
3335 + 232.5 = Full 5th = 3567.5 note 3 high was 3587 diff = 20
For a technical double top

Then a larger A-B-C correction to 500 below the Red 200 MA
3100 - approx 500 (above the Red 200 MA) = 2600 end of larger C

The larger A-B-C correction likely to correct when Wave 5 finishes after Election day Nov 3rd
A will be in a smaller ABC as shown in Orange to the Yellow 50 MA 3270
B Orange retrace to the lower Baseline Trend Line 3437 or Blue 20 MA
C Orange will test the Red 200 MA at 3437

The full Orange ABC will retrace a larger b = .618 of the full orange ABC move
3567 - 3100 = 467 X .618 = 288.5 + 3100 = 3488.5

Followed by an impulsing larger C in ABC move to approx 2600 in early 2021

Then a 5 Wave up to a new high approx 3750 to be refined when
new hard data (Actual larger ABC bottom) is determined.

Note Sept ESU2020 Chart cuts over to Dec ESZ2020 Chart 2nd Thursday of Sept.

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More importantly bank executives are good at numbers, which are telling them that less travel, unused expense accounts, and smaller, cheaper offices in Manhattan or wherever (I keep hearing Nashville and Denver), means more money for their bottom line.

Somehow I don't think it's only the bottom line, but also they want out of NYC.


Gold Member
Updated S&P Day Chart Trend Lines baseline Waves 2 & 4 to new wave 4 low.
FYI We tested 3335 at a low of 3337.25 at 9:30 AM Today.
Wave 4 likely to finish testing 3335.
Projected in previous projections above.



Gold Member
Futures cut over Thursday from ESU2020 Sept to ESZ2020 December Contracts.

Wave 4 Hard Low was 3286 so Baseline Trend Channel revised to that mark on ESZ.

Wave 5 climbing Fibonacci Retracement from Wave 3 high to Wave 4 hard low...

Target to Upper Channel line Wave 5 approx 3700

Wave 5 likely to be protracted in time similar to Wave 3.


Harry Dent's weekly rant S&P Target high 3588 - a bit low regarding revised ESZ trend channel.. Indicates larger S&P in Megaphone pattern with larget low in 2021 of 2000 versus our estimate of 2600... though our target subject to refinement based upon Wave 5 hard high and turn into ABC Corrective after the election... Remember Fed supporting markets hard as Biden-Bernie-Kamala-AOC has Powell terrified of the Marxists takeover of Fed, MegaBanks, and the Markets. Harry is in the ballpark so we will see if his pessimism warranted after Unemployment Insurance extensions and Eviction/Foreclosure moratoriums end.