Political Economy

Stock market and sunspots

Is there a correlation between sunspot activity on the sun and the stock market?  Yes.  Further, if  such a technical theory has a spokesperson who says it with confidence and a track record, people listen. However, for me personally, the correlation has no meaning. I would also imagine for a serious stock traders, it is more of a coincidental, but, let the fact be told there is connection and a good one at that. That is the purpose of this post, to look at the correlation.

  • Upward trending market are observed – when sun spot activity and solar intensity is high, there is usually a bull market.
  • Downward trending market are observed – when sun spot activity and solar activity is low, there is usually a bear market.
  • Sunspots and social trends – sunspot watchers point out solar activity affects human mood and emotions, they contend using Occam’s razor it is a good hypothesis.  I believe there is no way to make a meaningful comparison and it is coincidental.
  • As an economist –  who is a fan of Austrian economics and social behavior, there is no way quantitatively to predict human action that simply, if at all, based on an exogenous variable from the cosmos.
stock market solar activity
Does the sun affect human behavior? Yes. What about aggregate trends like the equity markets?

 The next major stock market crisis in 2013

This is according to former Goldman analysis and current stock market prognosticator and technical analyst  Charles Nenner believes based on solar trends we are in for another big drop in two years. Charles Nenner has been right in the past mind you, most not worthy about 2007, perhaps the only reason he has any attention.

  • Based on solar activity he believes the stock market will muddle through the next couple of years until a drop in 2013.
  • You can explore NASA website yourself and read about solar activity trends and the stock market , OK maybe they do not mention equity trends.

The following video is interesting to watch generally, not just about money-making.

Do what you like with the information, consider it maybe one more arrow in your quiver or ignore it, but I personally think market trends are hard to predict using any methodology, especially when expectations are factored in. This is why I prefer to look at the trend line as a whole and then drilling down to quantitative picks. On the other, hand I am writing about it as it sparks my curiosity a bit. In some fantasy world, I  would love to think like with Elliot wave or a Fibonacci sequence numbers there is an easier way to make money buying and selling stocks (I would never ever, go for something like  astrology and the stock market). But I always beam down to reality and return to the brick and mortar methods like outlined by Stan Weinstein or quantitative research companies.

So my question to you is, do you feel Wall Street is influenced by powers in the universe unseen or do you believe like Hans Solo in Star Wars IV ‘ who boldly states ‘ There’s no … energy field that controls my destiny’?

 

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Mark Biernat

This is my Youtube Channel: EconLessons

Comments

6 responses to “Stock market and sunspots”

  1. Adam

    The exogenous variable comes not from the Sun Mark but from the treasury. Its called vertical money and the banks create to horizontal money, It’s “Money” in to existence against every extension of credit. By the way this money can not be paid back unless more exogenous or vertical money is electronically created.

    Ben Bubble Bernanke is now sending the interest on the savings of millions of holder Americans that acted responsibly and saved for there hold age in favor of the Largest and Bankrupt Investment banks.

    What is this ?
    Its an interest spread Gift to the banks at the expense of savers. We could also call it a transfer of wealth or theft.

    For the privileged of having our money, Banks will paid us 0.10 of one percent.

    This also misleads small investors in to less qualitative products in order to get a return on there savings. Several Mutual Funds are loaded with BBB bonds and even lower ratings.

    As far as I am concern its a scandalous way to recapitalizes banks.
    If Banks books where real they would not be selling at 50% book valuation. It simply does not add up.

    We have promised to work tomorrow to cover to day
    so how does more spending more fixes this problem.
    There is no way the treasury will print us in to recovery.
    It’s an illusion that will melt in the “Sunspots in 2012-13

    Reply
    1. Mark Biernat

      You are correct. The banking system is what creates real world shocks. That is disequilibrium in the money markets create disequilibrium in the demand and supply of goods and services. Money is a curious thing. It is a medium of exchange, store of value and a measure of value and is perfectly liquid by definition. Therefore, you would think this market, the money market would be the easiest to keep in equilibrium as it is ubiquitous. However, the reason it is not ,a we have boom and bust cycles is the most important commodity is state controlled and state planned. For me that is ludicrous. To plan money from the top down is a failed idea. The Federal reserve is not the lender of last resort but the cause.
      Further the people who profits from this boom bust cycle are not the middle class for sure. Middle class normal working people are not moving their assets between different asset classes but are saving about $2,000 dollars a year and that is it. When the cycle is down, they are out of luck.

      Reply
  2. Adam

    That is correct Mark.

    I sense that there was and still is so much money in money markets because rates have been taken down artificially low during most of the the Greenspan years. Corporations started to borrow shots for longer term commitments. Not matching there low cost short term loans with there long term commitments

    When Bernanke finally raised the rates in the summer of 2008 all hell broke lose and several very large Corporation could absolutely not redeem there paper from available cash and where totally dependent on rollovers.

    Rollovers became much more expensive and profitability decreased wile risk increased simultaneously in just a few weeks.

    Again this was the result of more FED’s manipulation of rates.
    They should change the wording of there mission for:
    Our new mandate is to fix problems that they we have been creating.

    Like all Central Planing Organisation the FED as failed in its so call original mission.

    Reply
    1. Mark Biernat

      Monetary shocks from a centrally controlled money supply are the main reason for business cycles at least in the last 100 years.

      It is interesting to note that there were business cycles before the Federal reserve, however, not as dramatic, such as the great depression and the lets say great recession.

      Further, the business cycles of the 19th century were specific for events during that time in American history.

      The business cycles were real to the people of the 19th century. Such as the prolonged panic in the 1890s. However, not to be dismissive these business cycles were caused by such things as the government caused land boom, the government was giving free land or the gold rush and the civil war reconstruction etc. political economic realties that do not exist today.

      I would like to drill down more to studies these panics of the 19th century (1819, 1837, 1857, 1873, 1893, and 1907 for example). There was a central bank during the Great Republic years, that also contributed to the business cycle. There was an empirical study by Bill Butos one of my former advisors which looked at this topic.

      Also a book called ‘Out of work’ by Professors Vedder and Gallaway, They are on my list of books from the library. I want to stay objective, as I sometimes am clouded by my free market views. However, their books looked at business cycles in the 19th and 20th centuries.

      The way I see it is, unemployment or at least prolonged unemployment is always caused by downwardly ridge wages. People do not want to take pay cuts, there are unions or government regulation. If wages fell employment would stabilize. When I moved back to crisis America, I could clearly see countless low paying jobs. It was the better paying jobs that are hard to get. People choose to be unemployed because the opportunity cost of working is high given their time value.

      I understand this. On the other hand life is not fair and I would work at McDonald’s if I had to, really not a big problem. I am an educated and experienced professional but that does not mean anyone owes me anything or I am better than other people.

      Back to the subject, however, I am pretty confident we can say that the boom bust cycle was caused in the last 80 years or so by Federal Reserve bank policy. They are basically wrong every time.

      Government policies will continue with a centrally controlled central bank, high taxes, military industrial complex until the nation wakes up. The good news is I think some people are beginning to realize this, or maybe it is wishful thinking on my part.

      Reply
  3. Adam

    Very interesting points Mark.
    You should enjoy this video;

    http://www.youtube.com/watch?v=eOMPPBgKqoA&feature=player_embedded

    Reply
  4. Adam

    If the link does not work go to YouTube and paste:

    Central Banking (Freedom Filmlets Episode 2)

    Reply

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