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Sunspots

A J Tchijevsky’s excitement cycles, reopens the debate of Time.

The success in the new age is a lot different from what we experienced 11 years back. The shy public which needed market research surveys to bring out feedback is keener to offer comments. There were 30 odd comments on the Oil forecast, 398 comments on a dirty sport tackle on the yahoo sports blog and 425 comments on the 13 year old Everest climber. Are we in excited times? Or do you think we as a society are a bit less excited than what we were a few years back? Do these times polarize us as a society? Do we become indifferent? Is there some way we can quantify excitement? Can this quantification help us forecast? Can it tell us before our odds of success or failure? Can it tell us how to plan our investments and life? Can it tell us what movies to make? What products and business to launch? Does this excitement ever fall? Simply we are asking ourselves is excitement cyclical? And if it is cyclical, is cyclicality a science? But before we come to the science part, how time cycles are measurable and how it can revolutionize our understanding of the world around us, let’s have a closer look at excitement.

In December 1926, at the annual meeting of the American Meteorological Society Professor A J Tchijevsky’s (researcher at Astronomical Observatory, Institute of Biological Physics, Archeological Institute, Moscow) paper was presented, which elaborated the index of Mass human excitability, 500 B.C. – A.D.1922. This index showed a consistent pattern of 9 waves of excitability per century over the entire span of 2422 years. The index was compiled from detailed statistical researches in the histories of 72 countries and nations of the world.

Tchijevsky found not only that this index was characterized by the 11.1 year cycles, but that the crests of these cycles tended to correlate with crests of sunspot cycles. “In the paper published in the Cycles magazine of Foundation of Cycles 1968 issue professor quotes” As soon as the sunspot activities approaches its maximum, the number of important mass historical events, taken as a whole, increases, approaching its maximum during the sunspot maximum and decreases to its minimum during the periods of the sunspot minimum. Each cycle is divided into four periods. Minimum of excitability (3 years), Growth of excitability (2 years), maximum of excitability (3 years), decline of excitability (3 years).

Over nearly a hundred years since the research was published, a few things have changed. In the extreme point of the cycle’s course, the tension of the all human activity falls to the minimum, giving way to creativity and a general decrease of military or political enthusiasm, by peace and peaceful creative work and a disintegration of masses. The last sunspot cycle started in 1998, peaked in 2000 and bottomed in 2009. The society emerges out of excitability lows.

Now this is where the observations begin. The human excitability is at a 11 year low and we are in a few years of growth and prosperity. This might sound surprising and contrary to popular belief that we are in for a double dip recession. Excitability cycles tell us that from the lows in 2010, a multiyear equity bull should emerge. But there are strange coincidences here? Excitability cycles are not only in sync with sunspot cycles but also with a decade long Clement Juglar cycles.

The scientists say, don’t show me cycles and patterns coincidences everywhere. Show me the proof. Even professor Tchijevsky’s work did not get so much popularity as few could explain why excitability index was leading the sunspot cycles by an average 12 months. At some stage of thinking cyclists wondered that there was a force that affects both human beings and sunspots simultaneously. Proving why periodicity happened takes time cycle analysis to a scientific level.

Scientific rationalism against Time can be sticky ground. Specially because there is a lot more than empirical proof out there which suggest that time is mathematical and ordered, the reason for the coincidences, sunspots, growth etc. The first proof is History itself. Though the society uses the cliché that ‘history repeats’, it never asks is repetitive history not periodicity, recurrence in time, time cyclicality? Other clichés like ‘space and time are unruled by any law’ interferes with the truth. The whole idea is that if Einstein could not understand time, who can? History was always considered knowledge not science. Karl Lamprecht, German Historian showcased the order, history’s practical purpose was always considered doubtful. How naive of us.

Time is exponential and it is the one which gives nature and society its cycles. Periodicity and recurrence happens in society and stock markets because of this order. Time is why everything natural is cyclical, even human excitement. We can connect Sun with excitement or anything else, our behavior as a society is predictable. It was too much of a truth then when Professor Tchijevsky was jailed. How much of it is a truth now? We will see.

This article was written for Alrroya

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Author: Mukul PAL | Date: 24 May 2010 | Comments (0)

Categories: 2012 and Beyond, Patterns and Proportions

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Exponentiality is associated with herding not with value. Exponentiality can be defined as rising inclination in prices, larger gains in smaller time which visually looks like a rocket headed into sky or a bottom less pit. A look at Gold prices suggests this positive exponentiality.

Exponential Function

Look at platinum in (1999-2008), look at zinc (2003-2006), look at Dow (1974 – 2007).  Just to make the case clearer we have juxtaposed Dow (1974-2007) with gold (1999-2010), they look similar. Now this is not the classic intermarket chart we see every day, as gold is considered an asset of bad times, while Dow is for good times. Gold is also known as the crisis commodity that prospers in tough times. So the important questions one can ask is are we in an ongoing crisis as rising gold prices suggest? Or are we looking at an ending crisis as exponentiality and topping of gold suggests?

If we look at the element of time gold has been rising for a record 10 years without a retracement more than 38.2%. The metal has not witnessed a fall bigger than 9 months in time. While the Dow price exponential structure (1974-2007) topped in Oct 2007 and crashed 50%. Building on the case, we have more of a topping case for gold here and an easing crisis rather than what seems to be out there.

Out there we have sovereign risk, euro under attack, more than 12 month old recovery and if we look at the sentiment indicator, all time historical highs on gold will generate bullish sentiment extremes . This means more of an exhausting, up but topping case than otherwise.  To understand gold further we also plotted the precious metals against Euro and Japanese Yen. The aim was to take out the dollar bias. Gold denominated in Euro and Yen both were at weekly momentum extremes. Gold in Yen was still below 1980’s high and Gold denominated in Euro was gapping in the Reuters 3000Xtra charts. Considering EURUSD has also gapped recently on daily data, we are not surprised that price gaps on gold euro are conspicuous.

A closer look at industrial metals also suggest down structures. How can industrial metals correct while gold and silver push higher? Is this not a non confirmation? Even now things don’t add up if you are expecting a primary (more than 9 months)degree crisis. Things add up, if we assume intermediate negativity on equity markets not heading into Q4 followed by a global recovery.  We will have to wait and see how the respective picture unfolds.

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Author: Mukul PAL | Date: 13 May 2010 | Comments (2)

Categories: 2012 and Beyond, Forecasts

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Do you see the non confirmation between time oscillator and price? The non confirmation between the oscillator and price clearly suggests negativity going ahead for DOW. This is a case for an impending reversal. The oscillator structure also looks weak and ready to resolve lower.

This is what we said on 2 Jan 2010 for DOW Jones Industrial Average.

“Any January positivity should be an illusion. The first quarter of 2010 should be negative for DOW.”

Prices are up 0.96% from Jan high (10,729) to March lows (10,832). On one side we were wrong as prices did not reverse, but less than 1% upside is enough choppy action to prove that the best of TIME strength is over for DOW in the ongoing CYCLE.

March 2009 we started illustrating time oscillators with nesting momentum triads. We have been refining it since then. The current form of time oscillator combines three time frames. The oscillator moves like a cycle and should atleast push lower back till zero levels before anything. Time oscillator takes into account three time periods viz. minor (14 days), Intermediate (70 days) and primary (210 days). Here we have illustrated the time oscillator for NIFTY (India 50). The oscillator has clearly topped and should break down below key neckline supports soon. This keeps us looking at a topping price absolute price performance.

Published 2 Jan, 2010

Time Oscillator is a range bound indicator suggesting increase and decrease in time periods. Starting 30 Nov 1988, DOW witnessed a confirming increase in time periods till 30 Sep 1998. From 1998 time oscillator fell till 31 July 2001 along with the prices. Since 30 Apr 2008 the oscillator is falling till date. It is too early to assume that the rise in DOW is a new bull market and 2010 will be a positive year. Till the oscillator sees a further fall till 60-100 levels, the current rise on DOW remains a bear market rally that should correct into 2010.

Primary (multi month) perspective

Intermediate (multi week) perspective

Considering the primary (multi month) time is still pointing lower (above), the intermediate time oscillator at 250 days suggests an intermediate top might be near or already in. Only once since 2002 has the time oscillator breached 300 days.

Minor (multi day) perspective

On the minor time oscillator, the 2009 cycle seems over and prices should get ready to trend. Seeing the minor trend in light of intermediate and primary perspective, any January positivity should be an illusion. The first quarter of 2010 should be negative for DOW.

CYCLES covers global currency pair, global equity, emerging equity, and inter asset cycles. The product studies time cycle, asset outperformance and underperformance signals. The aim is to look at markets as a group and in isolation. This is a monthly perspective product that readers should use in conjunction with our other features like WAVES.GLOBAL , WAVES.INDIA, WAVES.FOREX, WAVES.METALS, WAVES.ENERGY, and other global features. Our economic and psychological world is well connected and cyclical. INTERMARKET CYCLES is a subject coined by us at Orpheus. The subject studies the asset linkages and the fixed periodicity between them. We look at the subject from three aspects. First from the sectoral aspect. As we redefine Equity sector rotation and reclassify global sectors into three broader sectors viz. Early Economic, Mid Economic and Late economic. We juxtapose these three broad sectors on the economic and business cycles. Second we look at subject from the 25-30 year Asset cycles. For example the 30 year Gold cycle and commodity cycle, which is inverse of the 30 year equity cycle or social prosperity cycle. Third we look at inter asset cycles between Gold and Oil, VIX and S&P, Technology and Blue Chips, Local Currency and numerous other asset pairs to look for asset outperformance and underperformance signals.

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Author: Mukul PAL | Date: 05 April 2010 | Comments (0)

Categories: 2012 and Beyond, Time Oscillator

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03 Nov 07 – Water, a key renewable resource, has just started a multi-year boom which should leave even oil behind

Throwing out the baby with the bath water is an idiom that has its origins on the monthly bathing ritual in Europe before the 16th century. The bath tubs were few and seniors of the house were the first to take bath, the children of the house came last. The very reason: the baby was thrown with the muddy and dirty bath water on occasions. It’s tough to validate this socionomic anecdote. But the question is that were some of our ancestors really low on hygiene or was it about water scarcity and economising of a resource? Well, the fact is that water has moved from abundance to scarcity through history and our ancestors did face a water scarcity in the past which might have forced them to change their habits. This also involved economising on bathing water and hence throwing the baby out.

Read more…

Scarcity creates water activists in Mumbai

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WORLD WATER DAY 22 MAR 2010

Author: Mukul PAL | Date: 19 March 2010 | Comments (0)

Categories: 2012 and Beyond

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The 1980s high was 150, talking about a 200 dollar target is much beyond the euro-dollar parity. What could be a few reasons a target beyond previous high at 150 may start assuming some probability? First: Dollar Index has made an average 15 year cycles starting 1970′s. A bottoming cycle in 2008 at least suggests multiyear strength well into 2012. Second, Oscillators have made a multiyear non confirmation of more than a decade. Non confirmations of such large time frames could validate the time cycle case. Third: The formation from the 1985 looks more like a completing corrective than a trend. This means even if we assume an ongoing counter trend, prices could reach back to previous highs at 150.

Further questions which come to mind are how can dollar rise, while commodities also strengthen? What happens to the US crisis? We don’t have answers to these questions yet. But what we can tell you is that time cycles might lead, lag and adapt to intermarket conditions. How time cycles do it remains to be seen.

Key levels to watch lie at 80. Above 80 the surprise of the decade is probable.

TICKS.GLOBAL – 01.04.10 07:41 (GMT) EURUSD. QUARTERLY. Momentum is one way to see TIME CYCLES. The current quarterly setup, retest of multi decade support at 1.34-1.35 and RSI momentum testing key supports suggest that we need more than a Greece bailout to stop EURUSD to fall till 1.2. All bounce backs remain corrective countertrend for us till 1.38 is clearly taken out.

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Author: Mukul PAL | Date: 14 March 2010 | Comments (5)

Categories: 2012 and Beyond, Forecasts

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This is what we wrote on 30 Aug 2008. The EURUSD was at 1.48.

“Though immediate targets for Dollar lie near 1.45 levels (EURO-USD), we are anticipating a multi month of strengthening back to January 2005 levels sub 1.4. This means that our case of commodity weakness and multi month of global equity reprieve starting October 2008 remains valid.”

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The influence of Dollar on various assets is very high. How it influences us this time around, however remains to be seen.

Understanding Dollar is as important as understanding commodity, equity and bond cycles. The currency is a global benchmark and it is this Dollar link that completes the economic cycle as assets interact with each other. Unfortunately we do not pay much attention to this link. The geographical bias, lack of inter-market knowledge, single asset focus and cycle blindness restrains our understanding of the currency.

The Dollar is as important as Gold. The two assets mirror each other and run contrary. If Gold strengthens, Dollar weakens and vice versa. It is the classic interaction between the tangible and intangible. Gold and commodities being the hard or tangible assets and the Dollar being the intangible or paper asset. Cash is an important aspect of the society and even if we are moving ahead to a more inflationary time, understanding cash cycles was never more important. Rather there have been times Gold was given less importance than the Dollar. In 1928, D H Robertson said, “The value of the yellow metal, originally chosen as money because it tickled the fancy of savages, is clearly a chancy and irrelevant thing on which to base the value of our money and the stability of our industrial system”. The quote more relevant then might seem so out of place today. But, the choice between Gold and Dollar is as cyclical as ever.

The American experience shows how debates about the nature of money, the control of the amount of money in circulation and how the relationship between Gold, Silver and Paper had moved to the central of political stage in the nineteenth century. This was a new phenomenon in the history of money caused by the extensive development of paper money and the constantly changing economic and political conditions of the modern world. In the book, ‘Money, A History’, Catherine Eagleton and Jonathon Williams explain how on one side it was the economic disasters linked to uncontrolled issue of paper money and on the other side a metal that faced vagaries of increased supply or a chanced discovery.

Though we have managed some of the old problems of the economic society, we are still moving in and out of an implicit Gold standard. And in some ways the Dollar is more important than Gold today. Important in terms the exposure we have to Dollar compared to Gold. The industrialisation of the global economy and consumerism of commodities are at a historical high. So, we have moved from the classical Dollar and Gold equation to Dollar and consumption as a whole. Dollar is the global cash proxy today. Even if we deny it, a Dollar strengthening or weakening of a few months can impose reversal in trends of global assets. Econohistory is replete with incidents of cycles in the debasement of currency and currency crisis. There are cycles from 18 years, 54 years, 108 years and 300 years. These patterns have been dominant back through time to the era before Christ.

Dollar weakness started at the base of the commodity cycle in 2000. While commodities soared, Dollar lost its value. In ‘The gold cycle’, we talked about a primary pause in commodity cycle. And in October 2007 (The Rupee Correlation) we said, “The big surprise always happens when people least expect it. We do not see the Rupee appreciating beyond 38, it is a turning point for us. And we are not far from a Dollar surprise as it turns around for a multi-month of strengthening.” This is what happened to the Dollar. Starting March 2008, the Dollar stopped weakening and is nearing back to January 2008 levels. About the Indian rupee, the Indian currency turned from a low at 39 in November 2007 and is back to 44, the 2006 levels.

Though immediate targets for Dollar lie near 1.45 levels (EURO-USD), we are anticipating a multi month of strengthening back to January 2005 levels sub 1.4. This means that our case of commodity weakness and multi month of global equity reprieve starting October 2008 remains valid. There are more reasons why we think that the Dollar strengthening is here for more than a few weeks. There have been prior occasions of marginal Dollar strengthening. But, there are only a few times that other currency pairs and assets also come in focus. The current bout of Dollar strengthening also affected the British Pound, which fell to a two year low. And, both Oil and Gold also witnessed sharp drawdown. This is a classic confluence and comes at a time when the world is waiting for a recession, a financial crisis, Oil at $200 and higher Gold.

Even sentiment against the dollar is at extreme levels. The negativity has also entered mass psychology and magazine covers still question whether the dollar comeback is for real? Investment strategist also mentioned about commodity and oil markets used as hedge against falling dollar. These linkages also break if dollar strengthens and oil drops. It’s only after the trend strengthens that generally trend news starts appearing, like now with American GDP numbers beating analyst expectations at 3.3%. In the process of crying negativity on dollar, the masses forgot that falling currency value also leads to flourishing exports.

We are in unprecedented times, which is no way similar to the discovery of Gold near Sacramento in 1848 when within four years more than 1 per cent of the population of the United States had moved to California. Monetary economics has moved from the central banker, to the state, to the markets ruled by the mob. This time it is the global Gold rush. How Dollar influences us this time around, however remains to be seen.

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Author: Mukul PAL | Date: 03 March 2010 | Comments (0)

Categories: 2012 and Beyond, Forecasts

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Source: Foundation of Cycles

Do you see the TIME TRIADS Head and Shoulder in Interest Rates?

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Author: Mukul PAL | Date: 14 February 2010 | Comments (0)

Categories: 2012 and Beyond

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The small positivity of the economic cycle is a part of the larger commodity up cycle, which threatens to destroy the concept of money beyond 2012.

The term Intermarket was coined by John Murphy in 1990. Murphy said that all markets are linked, domestically and globally, no market moves in isolation, analysis of one market should include all the others. A simple look at Reliance and Exxon, Infosys and IBM, Alcoa and Hindalco would prove how it is just the reasons that we see are local, the similarity in the move of three pairs suggest that conclusions are global. You really can’t differentiate one from the other.

Start of the year I was invited at the Holland day in Cluj, where I met a top billion dollar group CEO (valuation at the top in 2007). After the general greetings, the talk immediately shifted to the crisis and general remarks like “Who knew?” My attempt to explain that that it was not true, lead to some further questions like “where to invest now?” I mentioned about the value of Gold in the coming decade. At this stage the CEO said, “Gold is for women”. Maybe it was emerging market naivety, but there are still CEO’s there running billion dollar companies who are clueless about what Gold means. Actually we all are.

Gold has a case beyond 2012. It’s true that the last deflation in 1930′s gold had a limited history. But since 1970′s gold can be considered both an inflation and deflation hedge. The only time I think gold can really fall is during disinflation, where the society is living prosperous times. Murphy talks about gold increase when stock falls and vice versa. He also explains how gold leads the commodity index (CRB), leads industrial metals, mirrors the dollars (weakening dollar hurts gold and vice versa) and has a synchronous movement with foreign currencies (pegged against dollar).  A simple chart of gold with CRB since 1970 throws an interesting observation. It is first time that on a primary (multi month) basis that Gold has made a higher high compared to the rest of the commodities. This divergence is the first sign that this is the beginning of end of cash money that the current generation is used too. Any dips on gold into 2010 should be last opportunity to buy gold in the 2010-2020 decade. We have enclosed our preferred view on Gold here. Murphy talks about mirroring effect in commodities and currencies of commodity based economies like Canadian and Australian dollar and the connection of copper and Canadian dollar (both strengthen and weaken together). The book also makes a case of industrial metals like Aluminum and Copper which are considered to be barometers of economic strength or weakness. Rising industrial metals are associated with stronger economic conditions as are higher interest rates. Falling industrial metals are associated with weaker and lower interest rates.

If not more important than gold, oil is as important as gold and can hamper growth as it increases in value. Unlike Gold, which can go up owing to societal worry, inflation or deflation, oil prices can increase inflationary worries and force the Fed Reserve into monetary tightening. Oil is more a part of our daily life and hence has more interest rate connection than gold per se. This is what Murphy says, “The price of energy has more than a psychological effect on the inflation picture.  It has also an important effect on the economy. Oil rises have been a contributing factor in most recent recessions.”

Though the author does not suggest importance of one asset over the other, he considers interest rates as a key asset in the Intermarket outlook. Why do interest rates rise and fall will be addressed in a later article. But simply putting rising interest rates are negative and falling rates are positive. High Price- Earning stocks get affected by rising rates, a weakening economic cycle, while strengthening economic cycle and falling rates benefit growth stocks. Inverted yield curve (short term rates higher than long term rates) have been illustrated as a case of most recessions.

Though depression happened in falling interest rates, it created the base for a multi decade bounce. The book suggests a normal Intermarket outlook where bonds, stocks and commodities move up from a bottom in succession and top in the same succession as economic cycle tops. It’s in the deflation outlook that the respective sequence breaks as bonds continue to rise (or yields continue to fall), as they did in 1930s and later after the 2000 crash.

The outlook for 2010 based on the 30 year US yields, which fell secularly from Jan 2001 till Dec 2008 suggest a positive and prosperous time before commodities take over. I am not aware of Murphy’s take on this but a secular fall in US rates on the long term suggest weakness over the period under study. Market analysts may have a categorical view on weakness of Dow and dollar, but a decade long drop in interest rate yields till Dec 2008, weakness on dollar accompanied by strength of commodities has already balanced a lot of secular weakness in Dow components. To expect Dow to secularly underperform commodities, interest rates to keep falling seems a long shot at this stage. Any collapse on US equities remains an intermediate (multiple weeks) case rather than a case for primary negativity (more than nine months).

The Orpheus Numeric Ranking products were recently extended to bonds, metals and global Indices. NR bonds suggest that till end of the year 2 and 5 year US bonds should outperform 10 and 30 year US bonds. This means that yield curve should steepen and remain normal suggesting economic strength rather than weakness.

One of the best parts of Intermarket analysis is sector rotation where Murphy details Sam Stovall’s sector rotation. We have talked about it on prior occasions, how sectors move in an out of performance with the changing underlying economic cycle. The Orpheus ranking on Dow and Indian sectors brought out similar performing and underperforming sectors. Financials and materials led in both cases while consumer goods, utilities and health care lagged, a classic sign that the economic cycle had indeed turned up.

The gaps in the subject are that Intermarket addresses one economic cycle and not a larger or smaller one. Orpheus Numeric ranking can illustrate sector rotation on multi decade, yearly, quarterly, weekly, monthly, daily and lower time frames.  What does this mean? This means that in the process of showing Intermarket linkages both Murphy and Stovall ignore recurring cycles at smaller and larger time frames. Murphy does not bring out the idea of time cyclicality in his original work and his method of looking at relative performance through trendlines is crude. Intermarket performance can be quantified by performance cycles (refer to our previous articles on the subject).

The outlook for end of the year can be made from the current rising CRB-Bond, which favors gold, energy, and basic materials like aluminum, copper and paper products. Rise in industrial metals are sign of economic strength, the case now. The moment this performance cycle CRB-BOND will turn lower, staples, pharma and other interest rate sensitive stocks will start to perform. The influence of dollar is filtered through commodity markets. Dollar weakness favors large cap like now. Strengthening dollar favors small cap stocks and weakness on Dow in case of an anticipated dollar reversal. If a falling dollar pushes commodity prices higher, it is usually bearish for bonds (the case now). This cannot last long and is only making an intermediate negative case for stocks potentially till end of the year. CRB vs. gold is starting to push higher suggesting that the best of gold outperformance for the year maybe behind us.
Early next year can be understood by Dow vs. CRB ratio line. After 10 year of underperformance the Dow performance cycle against commodities should also turn up. This means after any dip till end of the year, Dow should head into a positive 2010. This is positive for global equities also. It’s only when commodities reemerge mid 2010, it will be time for us to review, the larger commodity cycle and agro, as the food crisis question will emerge again.

Author: Mukul PAL | Date: 24 October 2009 | Comments (4)

Categories: 2012 and Beyond

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The treatment of time in various religions offers interesting cues regarding time cyclicality.

The local priest is happy with the crisis. “People are coming back to churches and the faith is increasing”. The nine year cycles linked with religion and credit witness increase (decrease) in deposits every nine years linked with the decrease (increase) in the number of people going to church. Bloomberg has repeatedly reported the Hedge funds come-to-Jesus partners meeting, a time for unpleasant confessions and admittance that “I screwed up”.

Religion is an extension of human faith which rides on psychology. This means just like gold, oil, dow are connected economics, psychology and religion are tied up in the same social chain. The fractal chain which started from our understanding of the Euclidean triangle brings us back to the same question of time. Is religion too an expression of time?

Though it is all about understanding the time we live in, time expresses itself through aspects of nature implicitly not explicitly. Humans don’t love what is obvious. We love what is hidden, concealed, what excites and challenges us, what we don’t understand is what we want to understand. This is why we have religion, an attempt to understand God, a power of last resort which (who) is ahead of what Indian spirituality might say path of pure consciousness.

Understanding religion is important for markets, as religion has a lot to do with social upheavals. Religion defines us an individual. People may change their faith from one religion to another, create a new religion, but before everything comes faith and then comes nationality. We are assuming 80% (majority) as believers. The rest 20% (non believers) can give us a few more lines of patience. So what is so intrinsic about masses cannot be too detached from how the majority thinks. The attempt is not to see the rationality or irrationality of our faiths, but to see if there is some proportion, some mathematics, some cyclicality and time in religion too.

Humans attempt to understand God through time. If we can understand the link maybe it will improve our understanding of life, nature and economics. We could see further, overcoming the genetic myopia we suffer as a behavioral species. It is like understanding religion back in time, studying the past to understand the present to envision the future. This journey might bring us to the similar street we call as Dalal Street or Wall Street.

Time has always been an intangible subject, even in religion. Any theistic view of the world includes some notion of how God is related to the structures of the universe, including space and time. The various religions of the world discussed time as being either linear or cyclical, infinite (immortality of time) or limited (end of the world, end of time). Some ancient civilizations even worshiped time as one of their Gods, other cultures see God as being above time.

Starting with the ancient Egyptians and ending with today’s modern cults, all religions had some belief regarding the concept of time. The ancient Egyptians believed in the force of Mayet, the eternal order of the Universe which encompassed the cyclical patterns of time, the cycles of day and night, the cycles of the seasons and of human generations. Time is represented by Ra, the sun God who travels over the earth during the day. The ancient Greek mythology had Khronos (or Chronus), the personification of time and the ages, who was seen generally as destructive and all-devouring. Khronos also has a correspondent in Zurvanism, Zurvan, who is the hypostasis of time and space. According to Zurvanism, time is the source of all things, limitless, eternal and uncreated and it influences human destinies, appearing under two aspects, limitless time and time of a long reign.

The Greek language makes a difference between two distinct principles regarding time, Khronos and Kairos, the first representing the chronological time, while the latter is referred to as divine time or the right or opportune moment. Kairos is qualitative and opposed to the quantitative Khronos.

One particular civilization obsessed with the question of time were the Maya, who had the first exact calendar in the ancient times and took Time worship to a different level. The Maya understood a linear (past, present, future) and a cyclical nature of time, highlighting several calendar cycles and believing in the precedence of worlds. The present world had a tenuous existence and the Maya believed that the maintenance of continuous existence can be achieved by periodic human sacrifices. They sacrificed human lives in order to help the sun God travel across the sky (in order to help time pass). One Mayan prophecy sees the year 2012 as the end of an important cycle, the end of time, shift of the ages, judgment day or time of great purification. This was seen more like a transforming biological process, the end of a great evolutionary cycle and the beginning of a new age. In the article ‘A Dow Theory’ a simple rate of change quantitative exercise points to the same 2012 lows as being a key 10 year and 30 year time low.

The same religious beliefs were then taken over by the Aztecs, who also used an adaption of the Mayan calendar to measure the passing of time. The ancient Chinese culture also believed in the cyclicality of time. The concepts of Yin and Yang signify the forces of the universe repeating themselves and always returning to their source. The Tao can be interpreted as union of opposites by the middle way, illustrated by the metaphor of the flowing stream, the curse of life and time. Lao Tzu in “Power of the Way” expresses what we call the proportionality of time. “Completed cycles reflect a harmonious relationship in time and amplitude but are independent of both fixed periodicity and fixed amplitude.” There are many references to triangles in religion. The Chinese culture also sees time as part of an existential triangle. The triangle is framed by time, environment and fortune. For the last many thousand years the Chinese have been making continuous efforts to evolve a benign spiral out of this triangle. Hinduism also has a cyclical view on time, with cycles of the universe going through rebirth, growth, decay and destruction. The concept of reincarnation has its basis in this pantheistic point of view. The cyclicality of time is sometimes symbolized by the “uroboros”, the snake chasing its own tail, meaning that the beginning leads back around to the end and the cycle starts all over again.

The largest religion in the world by the number of followers, Christianity believes in linear time, more exactly in the concept that time moves from event to event in a line towards the future. Saint Augustine was among the first ones to insist on linear time as opposed to cyclical. Christians see God above time, as an all mighty and all knowing Creator who has power over everything, including time. Augustine refers to God as being timeless, unchanging and everlasting. He also states that there was no time before the creation of the universe and that God created time.

As opposed to the ancient Greeks, Christians see time as being only quantitative. According to them, time simply exists, it cannot do anything. It only provides the historical framework in which things happen, but has no innate ability itself. Dr. George Wald disagrees with this concept, as he states in his article called “The Origin of Life”, published in Scientific American. “Time is in fact the hero of the plot. Given so much time, the impossible becomes possible, the possible becomes probable and the probable virtually certain. One has only to wait, time itself performs the miracles.”

How did such a key idea of time lose its significance? Did popular religions like Christianity bias research thought with linearity? Would it change as cycles of power and knowledge shift from west to east? Will the Asian beliefs influence the way we look at economics and markets? How does it all sum up? Well we don’t have much to wait, 2012 is almost here.

Anna Maria Michesan and Mukul Pal

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Author: Mukul PAL | Date: 03 July 2009 | Comments (1)

Tags: linearity, religion, time

Categories: 2012 and Beyond

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It was barely a week before the Mumbai terror attacks that I was having meetings in south Mumbai, the area under siege. After staying two years at the YMCA Colaba, having weekly trips to Leopold and working at the Bombay Stock Exchange, I still consider myself lucky to have escaped two blasts in the region. I can’t imagine what my friends sitting there in adjacent buildings must be feeling.

“Sad state of the world” as a colleague put it summarizes the social behavior extreme we are witnessing. But even though sad and painful there are economic linkages to what happened. Some subjects are better left untouched, but maybe there is no better time to discuss this aspect of history, markets and terror. Moreover, now that psychology has started getting accepted as a valuable aspect in market forecasting, we as a society are not far away from revisiting History that has long been lost and would be ridiculed as a market forecasting tool .

Conventionalism would interpret news of Mumbai terror as not good for incredible India, business climate, cricket. A few boat men caused the exchange to shut down and brought a city on its knees. One can project what an escalation of conflict can do to market and economic sentiment. Reality is different. Historically, social unrest is a sign of bottoming economic activity (larger or smaller degree) and potential positivity rather than peaking or sustained slowdown. Why so? Because we as a society don’t fight when things are good and prosperity is more, we fight, when we are upset and there is a sense of loss and anger. Terrorists are part of the same society that we live in.

Terror and war are only different in scale. Their aim and effect are broadly similar and the sentiments they evoke are also the same. Kargil war lasted a few months and saw the markets gapping up from May 1999 till Feb 2002, 50 per cent higher. Economic recessions become news after more than a year of collapse (like now). And economic depressions are followed by wars not vice versa. This was the case of US Civil War of 1857, which was preceded by a depression. The 1932 depression was also followed by World War II. WW I also came after a recession, not before it. The 1942-66 Dow bull market started from the base of WW II. We could extend this argument to terror attacks also, and it’s not a coincidence that Mumbai terror attacks did not come at a market top in Jan 2008, but after markets collapsed 60% and fell for more than a year.

This is why trading conventionally on war or riot news is statistically a poor strategy. The terror news connections with markets are poor and statistically insignificant. Markets move in a preordained path. The Sensex closed positive the next day it opened after the attacks. Conventional thinking would call it market resilience, but this is a feel good factor, easy to talk on market shows, easy to write, hard to prove. Market fractals are indifferent to external events across time frames, multi year or multi minutes. It’s a truth we may find it hard to accept, but a time series composed of 1 min bars has predictive value with or without a war. Prices have no emotions. People have emotions, all the time and mostly the wrong emotion at the wrong time. Being a speculator, guru, or commentator debating whether market should be kept open or close while the ‘The Taj’ guts in fire and shooting happens a few yards away from the Fort area is easy, understanding what history and psychology means for market is tough.

In a paper written in on the Physical factor of the historical process, A L Tchijevsky talks about human history and how it has been found that even the most prominent intellects have been powerless to foretell the future of their own nations or countries or the outcome of wars and revolutions. Humanity has never formulated any law which would govern any particular historical facts or sequence. This was despite the gradual and progressive development of precise science. The basis for the destinies of history seems chaotic and the allotment of events in space and time (short periods of history or whole epochs of hundreds of years) unruled by any law. This is despite the fact that history has been proved to repeat itself, making it possible to model. Further study done by K Lamprecht, O Spengler, J de Condorcet (1793-94) suggests inefficiency in finding out the laws of history. People assume the hand of providence guiding the destinies of men; others like Taleb would call history random and a man speaking of the ‘practical purposes of history’ would be called irrational. History is wrongly believed to present knowledge of material already dead and useless for the progressive life. English historian, H T Buckle (1821-1862) shows that the principals and methods of natural sciences must be applied to history in his book “History of civilization in England”. A similar argument was made by J M Draper (1811-1882) in his work “History of the intellectual development of Europe” 1856.

The science of history is cyclical and proved to be connected with nature. It took more than 200 years for Fractal geometry to challenge Euclidean geometry. We humans are resistant to change. This is why field theory works. Conventional research is nothing short of herding, if we are closed to the other ideas. Human excitability like everything is cyclical and predictable. It’s not that brilliant ideas like new TV channels, 20 over cricket or Chandrayan that changed the industry, it was that the masses moved into a new realm of excitability that took us to a new cycle high. It is this excitement that also drives the economic consumption. Professor A L Tchijevsky also wrote about this excitability index.

It needs more than an open mind, to understand the linkage between markets, history and psychology. My father, an architect, understands fractals and the mathematical symmetry of markets and how they work in isolation unaware of news. But the subject of World War III cyclicality in 2024-2030 disturbed him. But then there is no order without chaos, there is no balance without imbalance, there is no growth without decay, there is no psychology without wide swings and extremes, there is no peace without terror and there is no economic cycle without a war. Every generation has its war. We will have our share of terror and war too, the only challenge we will have then is to see it as a lifetime wealth opportunity or a crisis that we fail to accept.

Author: Mukul PAL | Date: 05 December 2008 | Comments (0)

Categories: 2012 and Beyond

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