From: John Conover <john@email.johncon.com>

Subject: Re: forwarded message from Spirit Of Truth Page

Date: Sat, 31 Jan 1998 09:48:40 -0800

And, how has it turned out so far? So far, so good. Have to wait and see how the year turns out ... John > John Conover writes: > > > > The attached is more Domesday prognostications from the macroeconomics > > community. The attempt utilized is to establish some sense of > > credibility for such prognostications through a consensus of media > > reports. Not being daunted by the selective democratic polling of a > > the members of a profession which is founded on inductive reasoning, > > (ie., statistics,) I worked my way through the numbers: > > > . > . > . > > > > > How about the probability of 1998 ushering in a sustained bear market > > lasting at least 25 years, (as from 1930-1955, ie., a great depression > > starting again?) 20%. (20% sounds almost eminent, huh? Well, not > > exactly. There is also a 27% chance that the "bull" market that > > started in 1984 will continue through 1998. There is, also, an 11% > > chance that the current very "bull" market, that started in 1992 will > > continue through 1998.) > > > > I just received some email requesting an assessment of the probability > > of at least the following decade, starting 1 January 1998, being > > "bear" or "bull." > > > > The probability that the decade would be bear/bull is 50%/50%, almost > exactly. > > So, starting with 12 January, 1998, the probabilities stack up as > follows: > > Chances of at least a quarter century "bear" equity market: 20%. > > Chances of at least a one decade "bear" equity market: 50%. > > Chances of at least a one year "bear" equity market: 62%. > > Chances of at least a month "bear" equity market: 41%. > There was a 59% chance of a "bull" month. It was-barely. (NASDAQ, Up. DJIA, up. NYSE, Jan 1 = 511.19, Jan 30 = 510.63, call it neutral-maybe slightly "bear." S&P, Up.) > > Chances of at least a week "bear" equity market: 29%. > There was a 71% chance of a "bull" week. It was, for all indices. > > Chances of at least a day "bear" equity market: 45%. > There was a 55% chance of a "bull" day. It was, for all indices. > > John > > BTW, note that these probabilities only apply to 1 January 1998, and > will be different for any other day/week/month/year/decade in the > quarter century. Note also that the probabilities change over time. > For example, the probability that the decade starting 1 January 1978 > would be "bear" was only 29%, (ie., a 71% chance that it would be > "bull," which it turned out to be.) Note, also, that the > probabilities are dependent on the time scale-although there is a > likelihood that the quarter century will turn out to be "bull," which > days in the quarter century will be "bull," (or "bear,") can only be > forecast a few days in advance. Likewise for the weeks/months/years. > > As an interpretation of the probabilities for the US equity markets, > beginning on 12 January, 1998, the near short term is somewhat > optimistic, changing to optimistic for the week, and somewhat > optimistic on the outcome of the month, but pessimistic on the year, > neutral on the decade, and optimistic on the quarter century. > -- John Conover, john@email.johncon.com, http://www.johncon.com/

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