Are Astrologers Better Market Forecasters Than Economists?

“I cannot find a single convincing argument that tells me that astrologers won’t do better than economists.” – Nassim Nicholas Taleb

The author of “The Black Swan” and a former trader is referring to the “arrogance of economists making people rely on theories that have not worked, do not work, and are really dangerous,” along with the Street’s reliance on computer models (“quantitative wizardry”).

Taleb’s quotes are from an article in today’s New York Times about how Wall Street traders are paying close attention to prognostications by analysts and economists. Once again, the Times is attuning to planetary energies by publishing this article when the Moon (emotional outlook) is in Gemini (communications)*, and Gemini’s ruler Mercury is in dramatic Leo. Or as Goldman Sachs (GS) strategist Abby Joseph Cohen observes, “Less dramatic forecasts rarely make headlines.”

As the Times points out, “Wall Street’s crystal balls have performed even worse than in the past.” That’s because astrologers don’t use crystal balls, they use an ephemeris and computer software based on calculations by NASA’s Jet Propulsion Laboratory to create charts. These charts map what the Sun, Moon, and planets look like for a person, place or thing at a specific time and geographic location from a geocentric (Earth-based) perspective. Everyone can readily see how the Sun and Moon physically affect the Earth. Since our bodies contain the building blocks of our solar system, it stands to reason that planetary energies influence us. Behavioral tendencies and potential trends are interpreted from the experience of a few thousand years of observational study.

Back to Wall Street. The Times cites a forecast from Edward Altman, a finance professor at NYU’s Stern School of Business. “Altman declared that Ford (F) and GM (GM) had a 46% chance of defaulting on their debt sometime in the next five years. Not 47% or 45%: 46%.” Upon questioning by the Times reporter, Altman explained that his prediction was based on a computer model that calculated the performance of hundreds of companies with much less impact on the global economy than Ford and GM. Although the apples to oranges comparison yielded a 50% chance, Altman selected 46% to give it “a little more scientific magic.” Altman admitted that his prediction was “sensationalized somewhat” as “the chance of default of that type of company is probably a lot lower.”

“Scientific magic” and “quantitative wizadry”? That would describe the transit of Uranus in Pisces (2003-2011) where science/computer calculations (Uranus) merges with magic (Pisces, a sign ruled by Neptune). Now the economists and financial prognosticators, most who like to stick their noses up at astrology, are creating stats that sound very precise just to promote their brand (themselves), or to provide material for their hedge fund clients to trade on.

Then there’s the critics who believe you can’t predict the future by looking at the past. Astrology looks at what happened during similar planetary cycles as a basis for predicting what could happen next. However, it will take nearly 25,000 years for all the planets to return to the exact positions where they are right now. Let’s look at a couple of examples to understand how this works.

On September 2, 2007, Saturn entered Virgo. Saturn limits things, and economically when quantities are limited, they command higher prices. Saturn in the zodiacal sign Virgo would indicate that prices and supply/demand issues would arise in items required for daily living, since that’s what Virgo rules. This includes food and fuel. Saturn was last in Virgo in the late 1970s to early 1980s – the last time the world faced the same issues. Of course the world has greatly changed since then and the other planets are in different signs forming different relationships to one another. Taking all of this into consideration, I came up with my Saturn in Virgo trend post last August. Looking at the post, you can see that some of these things are already underway and like all predictions, a few might not even occur.

Since the Times article uses the automakers as a predictive example, let’s look at the Mars/Saturn conjunction in Virgo. In a post I wrote about Mars in Virgo (July 1– August 19, 2008), I said that the last time Mars and Saturn conjoined in Virgo was on June 23, 1980. This was not mentioned in my post, but that was the day that Chrysler drew its first $500 million of $1.2 billion in loan guarantees from the Federal government approved under the Chrysler Loan Guarantee Act Congress approved in December 1979. Today, Chrysler is in trouble again. The automaker is now owned by private equity firm Cerberus, and Chrysler LLC is facing a Friday, August 1 deadline to refinance $30 billion of its lending arm’s working capital. And it appears the federal government is still supporting Chrysler. The New York Times reported Saturday the housing bill contains a tax incentive provision that only applies to Chrysler.

The bottom line is that predictions are only as good as the predictor, and no predictive method is going to be right 100% of the time. And while Wall Street probably wishes that 100% predictive accuracy could be possible, that would imply the future is completely predetermined and we have no free will. Predicting is always about potentials. If you don’t like the road ahead, do what is within your control to change its direction, and/or think of the ways you can make the situation work for you rather than against you.

And while we’re going to face some very challenging times in the world over the next two to four years, I think the notion that the world will end when the Mayan calendar does in 2012 is a bunch of bunk. My primary concern is that as the Federal Reserve and the government continues to fight the natural law of cycles, the economic mess will linger on and be far worse than it needs to be.

*Federal Reserve Board member Frederic Mishkin will be giving a speech on “Federal Reserve Communications” today.

Related WSW posts that examined financial cycles:
“Stocks ‘Lost Decade’ From a Planetary Perspective”, “Bernanke Rejects Role in ‘That ‘70s Show’”, “The Commodities Craze”, “What Wall Street and Astrology Have in Common”,
“Orange County California: When One Jupiter/Pluto Cycle is Not Enough”.

Disclosure: I bought HGM during Wall Street’s apocalyptic panic over GM and intend to buy more if Wall Street reinstates a fire sale.

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