The stock market "correction" was predicted 8 years ago.... Here's the proof....
 

What do you think of this paragraph?

"From late 2000 into 2001, progressively lighten up on stocks and move into a strong cash position to await a potential significant correction in the market. Then in mid-to-late 2002, buy stocks again until the market nears its peak between 2006 and 2010."

This was written in 1993 (or earlier)....

He was almost right, the correction really started around mid-2000, so he was about six months off the mark.... But the guts of what he said was right.

It's a quote from "The Great Boom Ahead" by Harry S. Dent, page 188, published in 1993. (I've mentioned this book in earlier posts)....

He not only predicted the boom market of the 1990s, but also the current correction.... And the boom to come, starting around 2002 until somewhere between 2006 and 2010.... After that, we'll see a big recession (possibly a depression) as boomers retire and spend less....

His predictions are on the basis of nothing but demographics....

I'll be posting a graph about this in a following post....

It will pay to be prepared....

- Dien

How to predict booms and recessions....
 

Here's a graph which explains WHY we're having the current stock market correction, from The Great Boom Ahead (p. 40)....

(Sorry for the poor quality, I had to try to take a photo since my scanner got stolen.... But that's a different story....)



The heading says, "The Spending Wave Extended - The 49-Year Economic Forecast".

I hope you can read the numbers at the bottom.... These are the decades, from 1920 on the far left, to 2040 on the far right.... (We'll just look at the area around the year 2000.)

The line graph is the US stock market index....

The bar graph is the record of births, shifted by 49 years.

Do you notice how close these two graphs follow each other (when they are scaled appropriately)?

It's not exact, but it's pretty close....

Surely it can't be a coincidence...!

You can use this to predict approximately when recessions and "boom" times will occur!

If you look around the year 2000, you'll see a "dip" in the birth rate graph....

THAT'S the source of the current recession we're in....

However, if you look a bit further ahead, you'll notice the "boom" begins again, and goes until around 2010....

After 2010, it looks like bad news for the economy....

I just wanted to share with you this IMPORTANT tool.... Don't underestimate how valuable this kind of information is....

- Dien

What do you think of this?
 

Hi Dien!

That's truly fascinating. And it also makes perfect sense.

A large surge in births would see the market for baby goods take off. Then as those babies got older their interests would make other markets take off while the markets they'd just been in would decline.

And then when all those babies die...

So according to this research, the decline we're in will be pretty sharp, come to a sudden stop, level out for a while and then go back up. Is that right?

Anyway. Talking about predicting trends. The other week there was an article in the Sydney Morning Herald ( http://www.smh.com.au ) about the increase in knee and hip replacement surgery. (I'd find the article in the archives for you but going through the last month day by day looking for it again is too time consuming)

This makes sense what with the boomers hitting that age group and still wanting to enjoy life. And this follows the stay-young thing the article you linked to recently, as well.

So do you think having shares in companies which provide replacement hips and knees would be a good thing?

Michael Ross.

How you can know more than the financial media does.... :)
 

Hi Michael!

> That's truly fascinating. And it also makes
> perfect sense.

I'm glad you like it.... It's fascinating stuff....

What I find funny (in a way) is that all these commentators in the media who talk about the recession (or the boom we had before) don't know this stuff.... They don't realize that these movements of the economy have essentially been determined 49 years ago....

But like you said, it DOES make sense.... There's a rationality to it...

And one of the nice things about looking at a book published in 1993, is we can look back and see, over the last 8 years, how right or wrong he got it....

Harry S. Dent's record is pretty good. The guts of what he's said, I've found, has pretty much always been right, where he's been "wrong" is he makes guesses regarding the timing, yet that's not always right.... He can sometimes get his timing wrong by a year or two, so you should take these predictions within that kind of accuracy (with a possible error of plus or minus a couple years)....

> A large surge in births would see the market
> for baby goods take off. Then as those
> babies got older their interests would make
> other markets take off while the markets
> they'd just been in would decline.

> And then when all those babies die...

Yes, that's the essence of it.... It's a simple idea, yet surprisingly powerful.... :)

> So according to this research, the decline
> we're in will be pretty sharp, come to a
> sudden stop, level out for a while and then
> go back up. Is that right?

Yes, on the basis of this, I expect the current stock market slump to pick up and become a boom again, probably next year some time....

> Anyway. Talking about predicting trends. The
> other week there was an article in the
> Sydney Morning Herald (
> http://www.smh.com.au ) about the increase
> in knee and hip replacement surgery. (I'd
> find the article in the archives for you but
> going through the last month day by day
> looking for it again is too time consuming)

> This makes sense what with the boomers
> hitting that age group and still wanting to
> enjoy life. And this follows the stay-young
> thing the article you linked to recently, as
> well.

> So do you think having shares in companies
> which provide replacement hips and knees
> would be a good thing?

Yes, I would...

As I've mentioned before, I personally tend to invest in pharmaceutical and medical technology companies, and combine that with a "Warren Buffett"-style investment approach....

The reason I like these health-related stocks is demographics....

To invest now, I'd be thinking about what kinds of things will baby boomers and their children be wanting to buy over the next 10 years or so? And I'd probably tend to focus on those companies....

- Dien

Re: How you can know more than the financial media does.... :)
 

Very interesting. To take this further, if you superimpose the charts of the GNP & GDP, they also mirror child birth by year. I saw a transparency with this at a trading seminar. If you think about it though, it kinda makes sense. The more people you have working, the more you'e gonna produce.

When I saw this, I gave it alot of thought, cuz it could mean a bleak future ahead. At some later point, I was thinking how the gov't would be possibly preparing for this. You know surely they are preparing for the fact that the baby boomers will soon be retiring. Then it hit me. I have heard many people debating why the gov't is allowing illegal aliens enter into our country at such a rate as they are (particularly from Mexico). I have had a theory for some time now that this is due to the coming declining workforce and inclining retirement numbers. I have shared this with a number of my family and friends.

Vicente Fox, the President of Mexico was being interviewed on Hannity & Colmes earlier this week about illegal aliens. He was not even admitting that these folks coming into our country without permission from his country were illegal aliens. He was debating against this notion. He went on to speak of the benefits for our country for this exact reason. He gave alot of credence to my theory and even went on to mention that the baby boom in Mexico began 18 years ago. Very interesting, huh ???...lol.

Your ideas on investments sound very logical. I think that retirement communities are another good possibilty. They are already spreading and will probably be a lucrative business in the coming years.

My $.02 worth...lol.
Rick

Re: How you can know more than the financial media does.... :)
 

The correlation between birth rates and the economy is an absolutely accurate assessment. You can actually go back to various "milestone" times in the lives of the WWII baby boomers and see amazing up swings in various industries. For example:
Baby products when the baby boomers were first born.
The automobile industry when the baby boomers were getting their driver's licenses
Appliances when the baby boomers were purchasing their first homes

And now with the baby boomers entering into retirement, the travel industry is at an all-time high as well Elder Care Services for the baby boomers' parents.
The Law of Supply & Demand in effect!