Tuesday, April 24, 2007

Forget k-waves, check out the curves on this little beauty

END OF THE BOOM - DJIA 3000

Very interesting blog article that takes a look at the history of home values and the Dow.

Posted by harold @ 08:33 PM (568 views)
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5 thoughts on “Forget k-waves, check out the curves on this little beauty

  • Nice – feels a bit like looking at tea-leaves – but you have to admire how attractive and seductive these graphs are – as ever a good game of wait and see in at play.

    Being a pattern fan – this is top class – up there with Milankovitch, Kondratiev and Kuznet.

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  • sold 2 rent 1 says:

    I posted this DJIA article last week

    Why forget k-waves. The first graph is completely compatible with k-waves.
    The 4 phases 29-48-66-82-2000 represent the 4 seasons of the k-wave.

    Someone asked earlier why the k-wave was so long (70 years).
    After a couple of beers and champions league game, my brain figured it out in “screen saver” mode.

    The k-wave start has people with virtually no debt whatsoever
    The end has people with debts coming out of their eyeballs.

    Between the start and end we have 4 secular bull/bear runs.
    In those secular runs we have multiple economic cycles.
    In those economic cycles we have mid-cycle slowdowns.

    Each generation from the start will get more comfortable with debt.
    Think about how much more relaxed about debt you are compared to your parents.
    Think about how “kids today” just rack up debt you wouldn’t have dreamed of at their age.

    It takes 70 years for this whole process to work.

    In K’s initial theory each wave was 45-60 years. Now it appears to be70 years (increase in life expectancy)

    The first half of the k-wave is inflationary, the second is deflationary.

    We have inflation now because we overshot the 70 years because central banks crashed rates.

    Once these economies hit the buffers, this inflation will rapidly disappear.

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  • Could this 70 year cycle be akin to the 70 year revolutionary cycle. 1918 the great Russian revolution – First generation are committed Bolshevics. Second generation suffer the disillusion of tyranny and fear. Third generation are cynical and find ways of undermining the regime. 71 years later it all collapses.

    Or is it like the truism of 3 generations from rags to riches to rags. First generation is born poor but through wily ambition gets rich. 2nd generation have learn’t some skills but lack the ambition. 3rd generation have no skills and no ambition and complete the circle back to poverty.

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  • S2R1, the “forget k-waves” comment was meant tongue-in-cheek. I can see how this article and the K-wave theory fits together, and also why it may be related to average life expectancy; however, debt can be passed from generation to generation as can wealth, a fact that may skew the time-scale. Sorry if you posted this article already – the site usually prevents double-postings, but let it slip through on this occasion (my title was more catchy, however!).

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  • I think it is interesting that as history moves forward although technology changes human nature does not. Over the last 100 years society has become morally redundant and this is showing up in the financial systems and businesses we use. As you point out s2r1 each generation has become more relaxed about debt and once respected institutions like banks,businesses and governements are now regarded as money grabbing parasites. This is why I think the whole system will come crashing down, just look at history we are following the same path of previous societies, but of course we think were different.

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