Is the stock market overvalued?

Does anyone else agree with my assessment that physical gold, physical silver, some stocks in the miners, relatively safe debt, and uninvested cash are the only things worth holding now?
Here’s my reasoning:

1. The stock market is still at all time highs with crazy high valuations.

2. ETF’s are the new craze in “safe” passive investing.  When investors get scared from a decline, much of the money that’s been piling in and pushing values up will rush to safety and pull values down.

3. Since 2009, Central banks around the world have been creating large amounts of money for “investments,” including outright stock market purchases in some cases.  This is beginning to reverse in minor ways with the fed and other central banks may slow their easing as well.

Here’s what I think will happen:

1. The decline of new hot money from central banks along with quantitative tightening will spark a minor correction, maybe 5%.

2. Many ETF investors will get spooked, put out and more will follow, causing a more significant downturn in stocks.

3. Central banks will respond once again with easy money policies.

4. Hot money will be more excited about gold and silver this next time around.

I’m at the airport writing on my phone, so I’m not going to include links or charts.  Interested in your thoughts though.

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I’m back from my trip, and I can’t resist posting this chart I got from realvision.com

CBTOTL is, verbatim from the website: CBTOTL is a custom index of the FED, ECB, PBOC, BOE, and BOJ. Note the correlation with the S&P 500, including the stall in the S&P coinciding with a steadying of central bank balance sheets in 2014.

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Quantum Mechanics question and proposed experiment

I’m watching simplified lectures on quantum mechanics to try to get the gist of it, and I have a question:

Background:

In Quantum Mechanics, the law of superposition states that all possible states need to be added to determine the end state. This test uses a device that splits and recombines photons which have two possible ways to go. They interact like waves to cancel each other one way (destructive interference) and recombine the other way (constructive interference). It shows that even when using one photon at a time, they always go the same way, as if the two possible states are still interacting with each other.

Question:

Could it be that the probabilities aren’t totally random?

Note that using normal probabilities, flipping a coin is a 50-50 shot at heads or tails, but if you flip the coin 10 times you’re most likely not going to get 5 of each. In quantum mechanics are you guaranteed 5 of each?

Proposed experiment:

If you do a 2-slit experiment with light the light forms an interference pattern, and you calculate the exact number of photons that create this pattern and shoot them through one at a time, will it always show the pattern?

Or a more realistic version: you have a low-light laser (close to or at one photon at a time) going through a two-slit experiment hitting photon detectors that record the position of the hits. You take very short time exposures and see if they are always getting the same pattern, or at least close enough to defy normal probability?

In normal probability, there’s a chance that only one side or the other lights up and you’d see a test reflecting a perfectly probable off-normal distribution in a very short exposure.

Anyone hear about anything like this?

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Answers from physicist friend:

1) I’m not sure how to interpret your first question, but in QM, the wave function is used to describe how the probability varies as a function of space and/or time. As regards individual events, all of the experimental data would say it is perfectly random.

2) For a 50/50 situation, the QM case would behave the same as the classical coin toss case.

3) It doesn’t matter how slowly the photons are sent. You can send one every 100 years and you will still get the interference pattern.

That doesn’t just go for photons, it goes for electrons too, or atoms or anything, e.g. people. The notions of a pure wave or a true particle are only figments of the human imagination. The reality is everything has properties that we associate with both classical waves and particles. Therefore everything will generate an interference pattern.

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My reply:

I’ll stick with the photon as an example here simply because it’s the easiest to experiment with. So here’s what I’m thinking…

Perhaps the probabilities expresses in quantum mechanics aren’t truly random. If you set up a single photon in a dual slit experiment, we can use the probabilities to predict where it goes next, but each photon leaves a trace behind – perhaps a shift in a currently undetectable medium – and the next position hit reacts to these previous traces such that it’s next destination would be predictable if we knew where these traces were.

If random chance plays a role, then you should only rarely get a perfect interference pattern when you shoot through just enough photons to complete it – think of the actual probability of flipping a coin 10 times and getting exactly 5 heads and 5 tails and you see what I mean.

If random chance doesn’t play a role, then every short exposure in my proposed experiment should show almost exactly the same pattern.

My hypothesis is that there is some kind of shiftable non-detectable medium that these photons react to in a wave-like way, but that the medium isn’t necessarily stable over time. In a short-duration test you would get close to the same pattern every time, but if you separated the photons over longer periods then something outside the experiment is bound to affect this medium and it will more closely exhibit true randomness.

Keep in mind that only a small fraction of the universe is in any way detectable, so I think something in that unknown realm is influencing detectable matter in a wave-like way, and that potentially other non-detectable particles exist that could influence it over time. Think of muons shooting through for example – those are really hard to detect and the apparatus to do so is quite bulky, yet they could potentially affect a quantum calculation.

My goal here is to create a more realistic visual model that fits the data – like picturing all particles moving through a dark stream. Note that the stream involves energy waves rather than physical matter in my view, which is why it acts like a continuous stream … electric and magnetic fields are still thought of as continuous phenomena, hence the term “fields”.

The problem with quantum mechanics that Einstein and others have is that:

1. it is more of a mathematical theory than a visual one

2. Einstein was always convinced that the physical part of particles like electrons have only one physical location in a point in time (though in real-time the probability cloud is more useful)

3. It uses a lot of random probability. Though this fits the calculations in macro-time very well, many believe it shouldn’t be the basis of theory and that there’s a deeper story there.

I think a theory of matter moving in dark streams built at first to explaining quantum mechanics could address these points and lead to interesting questions in how to further test and define them.

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Running through nature is essential for mental health and happiness 

I felt absolutely amazing running today – made it nearly 3/4 of the way without alternating to a walking pace. I felt like sprinting and did some good sprints.

Then I noticed the sprinklers shooting straight into the sidewalk with others jogging around it. I sprinted straight into the sprinkler blast with a big wolffish grin on my face … I don’t know what it is, but I love to break with convention and let my freak flag fly.

When I got back to the car, I didn’t want to go home, so I went exploring. Neat trails, graffitied bridges, shopping carts full of who knows what, empty beer cans & cases, and a few tents.  

I turned back of course. It’s just fellow humans going through tough times, but I couldn’t help thinking it’s why I don’t go out running after sunset. That and its colder I suppose.

I hate to say it, but it does remind me of how truly blessed I am. Now I’m back at my place, ready to get some reading done in the yard. 

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Just a post

It’s been months since my last post.  What can I say, I’ve been busy.  Construction boom in LA, lots of work in tile right now.  As a project manager with all the change orders, submittals, RFI’s, etc. I can’t stand to look at a computer when I get home.  I long to write, I really do.  I’ve been reading a decent amount – mostly fiction lately.  The Trump stuff gets old … I get that the “status-quo” crowd lost because there are real, ignored problems in the country today, and I get that Trump won’t fix it.  It’s time to move on already- it’s old news.  We’re lucky to be in the US at a time when central banks are extending the market cycle to the extent that it destroys the working class with ever more minuscule gains for the paper wealth of the rich.  Most countries have a rich-poor divide far worse than ours – and every bit as self-righteous and abnoxious.  

Anyway, keep plugging away while there’s still work, one of these years it will evaporate as surely as it did in 2008.  The main question is will it be yet another step down where wages fall while costs rise, or will a real socialist hero come forth talking of things long forgotten- like a living wage, and housing for the middle class.  The alternative is the authoritarian type which merely consolidates his own power, but change will come.  Who knows when it will be safe to own a home, who knows when it will be safe to raise a family … the day will come, one way or another.  Those on top are insatiable parasites who would push all into slavery to increase the paper value of their assets, but a democracy like ours allows built-up pressure to create just enough change to prevent the bloody revolutions seen in more autocratic societies.  There’s hope for future generations at least, and our life isn’t so bad if you can give up on raising a family or meaningfully shaping the world.

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The real problem with voter fraud

Both the Trump camp before the election and  the Hillary camp after the election cried voter fraud.  Is this just modern politics?  To some degree yes – but there really is a problem with voter fraud in the US.

I wonder if Trump will bring back the idea of Voter ID requirements. The Bush administration pushed that for a while but ultimately they caved to media pressure as it was fought in liberal courts.

The Dems always block it claiming that minority’s can’t get ID’s or something, but minorities are just as American and just as capable as anyone else in this country.  

The real reason it’s routinely blocked is not minorities and has nothing to do with illegal immigrants either … Illegals are often poor, nervous, and careful – more worried about survival in a heartlessly treated underclass than political manipulation. 

So why block voter ID legislation?  Because the hardcore ends-justify-the-means liberals like to stuff the ballot boxes by voting multiple times. They do this all the time in big cities like my current hometown of Los Angeles. It’s two-faced and shameless behavior, but that’s our corrupt political system for you.  They believe it’s to protect the environment or for some media-hyped racial divide when the elites could care less about those issues and are merely using these people to fix elections so they can line their own pockets. 

When I voted in Los Angeles at the women’s center, the person in front of me asked if you needed ID to vote.  The person at the booth said no, and the next person had a list of names and asked his name.  He could’ve said any name he spotted on that list – it was right on the table for all to see.  I kept my mouth shut, moved on, and voted … It was late in the day and any protest would just cause me problems without solving anything. Will things change?  Probably not, but there’s hope.

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Is the Eurozone finally ready for long term solutions?

Will the Eurozone receive a wake-up call in the coming year of the rooster and finally come to a decision that allows its member countries to heal economically?  This may very well be the case.  

Tsipras has been pushing unpopular reforms devastating to many of his people, particularly poorer retirees, in order to keep ECB money flowing and so that Greek banks can function.  His popularity has naturally been dropping.  In order to try to ease the pain of some of the hardest hit, he provided one-time pre-Christmas payments to retirees making less than $800 euro per month.  

https://www.theguardian.com/world/2016/dec/09/greece-under-fire-over-christmas-bonus-for-low-income-pensioners

https://www.theguardian.com/world/2016/dec/14/greece-on-collision-course-with-lenders-as-esm-freezes-debt-relief

https://www.theguardian.com/world/2016/dec/04/greece-must-reform-or-leave-eurozone-says-german-minister

Merkel has been struggling in regional elections as eurosceptic AFD has been beating her CDU party, with her CSU allies Still in the lead.  Though she’s likely to get another term next year, she can’t afford to be seen as lenient on Southern Europe. 

Italy meanwhile is having its own banking crisis – again – and Renzi has resigned as promised following his failed referendum.  You don’t talk about national bailouts when banks are solvent:

https://www.theguardian.com/business/2016/dec/12/italy-monte-dei-paschi-di-siena-rescue-banks

http://www.mauldineconomics.com/outsidethebox/italys-day-of-reckoning-is-coming

Of course French banks have been having their own problems and those of Deutsche Bank are becoming ever more apparent.  

Here’s tickle desiring some key election dates:  

https://www.theguardian.com/world/2016/dec/02/year-of-electoral-tests-may-end-european-union-as-we-know-it

Essentially, the Eurozone is in a crisis.  Ever since the creation of the Euro as a currency, industrial production has been slowly collapsing in Southern Europe- particularly France, Spain, and Italy while it has been growing in Germany.  To make matters worse, Europe had followed the the ill fated financial deregulation started in the US by Bill Clinton, resulting in a lending/housing asset bubble far bigger than that of the US.  The similar “solutions” of never ending bank bailouts, quantitative easing, and low interest rates – which merely gut the middle class to pump asset values for the rich – have been even worse than ours as they went on the negative interest rates and direct corporate stock and bond purchases.

As a result, the employment situation is bleak as those fortunate enough to work have significant underemployment, stagnant wages, rising costs, decreasing benefits and often little job security.  Naturally this has a significant impact of family formation and birth rates among the locals.  In come a large influx of Muslim refugees with very different cultures and higher birth rates enabled by the acceptance of having children in difficult and overcrowded conditions with extended families in tiny apartments.  Not only does this supply a source of cheap labor pushing wages down further, but it makes many Europeans fear they are being replaced.  Will they sit quietly by and watch their cultures disappear as foreigners pour in while their educated youth are forced to seek employment elsewhere?

The idea of any type of Federal Europe complete with legal & fiscal Union and permanent wealth transfers becomes ever more remote, leaving the breakup of the Euro as the only real solution.  The Euro was known to be dysfunctional from the start, which is why the EU pushed so hard for an “ever-closer Union” despite its unpopularity among voters.  Unfortunately, leaving the Euro currency also means leaving the European Union, though that might change as the cold, hard reality sets in.  Regardless, the member countries are experiencing severe economic pain which can’t even begin to heal until the cause is removed.  Like surgery removing a poison bullet, this will cause it’s own discomfort but is nonetheless necessary.  Are they ready for real solutions?  I think so, but I suppose we’ll have to wait and see.

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The Eurozone may be nearing the point of long term solutions 

Will the Eurozone receive a wake-up call in the coming year of the rooster and finally come to a decision that allows its member countries to heal economically?  This may very well be the case.  

Tsipras has been pushing unpopular reforms devastating to many of his people, particularly poorer retirees, in order to keep ECB money flowing and so that Greek banks can function.  His popularity has naturally been dropping.  In order to try to ease the pain of some of the hardest hit, he provided one-time pre-Christmas payments to retirees making less than $800 euro per month.  

https://www.theguardian.com/world/2016/dec/09/greece-under-fire-over-christmas-bonus-for-low-income-pensioners

https://www.theguardian.com/world/2016/dec/14/greece-on-collision-course-with-lenders-as-esm-freezes-debt-relief

https://www.theguardian.com/world/2016/dec/04/greece-must-reform-or-leave-eurozone-says-german-minister

Merkel has been struggling in regional elections as eurosceptic AFD has been beating her CDU party, with her CSU allies Still in the lead.  Though she’s likely to get another term next year, she can’t afford to be seen as lenient on Southern Europe. 

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