Proof of concept: successful results

A record of being right about the markets

Bill’s accurate ”calls” result from close attention to fact over hype, the development of effective tools, and the acute perceptions honed by more than three decades' experience. When Bill makes a verifiably accurate forecast, he calls it “proof of concept”. For example, here is a version of his Daily Report for Wed, January 2, 2008 – edited for length. Click here for the complete text.

“There are a lot of unknowns and negatives. Analysts will be looking at the mega-billion dollar write-downs of firms like Citi and Bank of America. Pension, hedge and mutual funds, and corporations have also purchased this bad paper. Globally, I expect the aggregate damage will be between $250 billion and $1 trillion, something the world has never seen. The issue is that some financial institutions will fail and when they do, others will not get paid and will run into financial difficulties.

Fiat money of most of the economic powers will be poured into the financial system to keep it afloat. Normally, the $USD would plummet, but this time the $USD will remain in the 75-83 range. While other nations may walk away from creditors, the possibility of the US doing that is slim to none, and that will keep the $USD and Treasury prices strong.

Crude Oil prices will fall unless the producers wish to have a world depression. Already the economies of North America, Europe and some of Asia are slowing, which will pull down the oil price from almost $100/bbl. By year-end, prices will be much closer to 75 than 125/bbl.

I have no idea where equity prices will close the year, but I suspect that as corporate earnings fall due to write-downs, business failure affect, slowing economies, etc, prices will be significantly lower. At the cycle lows of 2008 for the DJIA and Nasdaq Composite, I believe the levels will fall from 13264 to about 10000 and from 2652 to about 2000, respectively. But, frankly, forecasting major market index levels at times like this is a mug’s game since none of us knows how much money printing will happen among the major powers.

I used to live in a modern $15,000 house and drink a six-cent Coke. Money printing, taxation and wealth destruction via military conflict are the reasons that prices, apples to apples, are twenty times higher today. Share prices, too, are affected by money printing and inflation."