QUESTION: Dear Martin,
Following your your posts has become a favorite hobby of mine. I just graduated with a degree in economics but it is your work that has led me to the research I am dong now. Unfortunately I had to approach the physics department to research deterministic chaos. Regardless, I am so happy you are out of prison and back at doing what you do best. My question is simple. When scaling your forecast, how do you forecast out with such precision considering sensitivity to initial conditions. I understand that your model is proprietary and I respect that. I will happily accept any answer.
Respectfully,
BJ
ANSWER: One of the most fascinating aspects I came to understand was that it is far easier to predict the long-term than the short-term. The reason for this is the trend set in motion is not easily changed if not impossible. The short-term is noise. If the Dow closes up 100 points or down 100 points tomorrow, it really does not matter regarding the overall trend. Much of what I discovered when you simply open your mind and do not ASSUME I know everything, was that the overwhelming majority of theories are dead wrong because they try to create so-called maxims of economics and market analysis. These theories tend to be a slice of a small piece of time and then people try to extrapolate that fragment as some sort of fixed relationship applied in perpetuity, Therein lies the problem and the most fascinating aspect is that everything will gyrate back and forth between two opposites. It is simply the way everything functions within the universe. Start with that as the divine design and build from there. There is no relationship that is ever fixed or etched in stone.Not even gold and silver will always trade together. Absolutely nothing is permanent. It is always flowing on a cyclical aspect as is the case with everything in nature.
