It is interesting to talk to my friends on Sunday morning. We explore the problems of the world. We know it is a way to keep us challenged. Nothing will change. But we have fun doing it.
Nothing matters, the Taoists believe. There are two ways to read this sentence. One way of interpreting it is that whatever you do is inconsequential. What really matters is now. In Zen meditation, you can use this sentence and make it a koan, a riddle. Another koan? What is the sound of one hand clapping?
On Sunday, we bombard each other with jokes, medical, financial, economic, and political issues. Anything goes. SNS, for instance, is a firm believer fashion captures the mood of the people.
Why are hemlines rising? A recent article on the subject shows that when the economy crashes, hemlines fall and hide the knees. This is a sign our mood becomes more somber and fashion adapts by covering more of our body.
In a strong economy, however, people feel better, and hemlines rise, clothes becomes tighter and skimpier. And when people are euphoric the stock market peaks -- in the best of times. Stocks are anticipating a slower economy and weaker profits. This could be a reason why high hemlines are typically found at market tops.
I have another interpretation, based on economics, not on behavior. When the economy is strong, commodity prices, interest rates, and overall costs rise. Fashion designers concoct a skimpier fashion to minimize costs. Prices rise with rising commodities as they try to defend profitability. This is how they maintain their margins. This is also the time when the market peaks as commodities, inflation and interest rates rise in a strong economic environment. Classic bear market signals.
As the economy weakens, costs and raw materials decline. Designers entice us with more complex fashion and hemlines fall. And it is in the worst of times that the market bottoms.
What is the impact of sunspots on all this? I am working on it because they influence the economy. Do they?
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.
Disclaimer. No material here constitutes "investment advice" nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
No comments:
Post a Comment