Nov

25

Forecaster, the Movie, from Larry Williams

November 25, 2014 |

1 Comment so far

1. Fraudstrong? on December 1, 2014 12:13 am

   I have been looking into the work of Martin Armstrong. I think he might be one of the world’s biggest examples of Apophenia, Selection Bias, and Confirmation Bias anywhere. His time in jail doesn’t help. He often creates lengthy reports which reference other lengthy reports which in turn reference other reports including his 63 page bio. What this means is good luck auditing a few thousand pages of paper trail. If you have the time and energy (and all the documents are available) you will probably just end up chasing phantoms.
   Armstrong got his start apparently working as a gopher for a bullion dealer if you believe the New Yorker (which flatly states their conclusions are only based on Armstrong’s telling). He bought some rare coins and got rich then went broke shortly thereafter but had gotten a taste. He got into the markets in high school and mostly skipped college. He became a student of the history of markets and looked at the years 1683-1907 (presumably ending in the 1907 panic) arriving at 224 years. He identified 26 “panics” over this period. It is unclear how he defined panic. He then divided 224/26 and got to 8.6 or 8.6 years. Using this logic he determined a panic should be expected every 8.6 years. This translated to economic cycles being 8.6 years. The real unrounded number should be 8.61538 (which will be meaningful shortly). Armstrong was kicking around his abacus and found that 8.6 years was 3141 days which was the same as Pi*1000 and thus had some secret hidden and higher meaning.
   A few things deserve mention. First, 8.6*365 =3139 not 3141. However there would be 2 leap years so he added +2 to get from 3139 to 3141. Second, from the example above, his division got to 8.61538+ years which would be 3144.615+ days. Adding +2 to account for leap years using an unrounded number (8.6 vs 8.61538) would have brought him to 3146.615. So some fancy manipulation allowed him to arrive at the market’s mysterious use of Pi. God or some higher power must have told him to round here, add a day there, etc. And thus was born his Economic Confidence Model (ECM).
   From what I can gather (again it is confusing), the ECM went back in time and found a significant market event date which qualified as a “major” date and then rolled forward for that particular market. So if something happened on the date xx/xx/xxxx one should expect something else to happen on xx/xx/xxxx + 8.6 years. The specific event is not known.
   While waiting his necessary 8.6 years, he found another event that happened to coincide with a factor of the 8.6 and thus decided there must be major and minor turning points each of which is determined by some factor of 8.6. Examining some of his work, events seem to come on 8.6 year intervals, 2.15 year intervals, and 1.075 year intervals. Pi is hiding in the woodwork, manifesting itself in factors of itself (after multiplying itself by 1000, converting to days, and hiding in 8.6 (rounded) year increments). You just have to know where to look. Examining a chart of the overall ECM (presumably he combined all the major major predictions gone right) the model has predicted: market peaks and troughs, taking out prior highs and lows, wars starting and ending, political happenings, devaluations, on and on we go.
   Let’s examine this statistically. Let’s say you use 1.075 year intervals (8.6/8). In any 100 year interval for a given market you would have 93 pivot points. If using the “major” 8.6 interval you would have 11.62 pivot points. If you included 10 markets in your model you would have 930 or 116 potential events. 50 markets would be 4650 or 581. And that is before you begin to tie in what an event might be: an intraday low, a volume event, a high or low close, a high or low high or low, a massive range, the start/end of a currency regime, an election, a war, an OPEC change, an event that leads to any of the above in hindsight, etc. You get the idea, the possibilities are endless.
   Your infinite combination of events is bound to get some massive turning points right and boom “My model predicted”, “I’ve been saying this for years”, just read these 20 thousand pages of gobbledygook and you too will see that at some point in the next X years some market somewhere is going to express some kind of extreme and my model and Pi will have known it all along. And if we apply the model to every market since the dawn of time (and every “event”) and we don’t have to be exactly precise (we can always say hey we got the high/low within 20 days) we can’t be wrong. By the way, that’ll be $100k/year to predict the next event somewhere somehow someday.
   As a perhaps telling yet comedic side element, Armstrong claimed that the 1998 film Pi (which focused on a genius Mathematician who discovered the secret of the stock market in a 218 digit number involving Pi) was based on him. However Armstrong had not yet revealed Pi as the secret sauce behind his Economic Confidence Model. The filmmaker says he never heard of Armstrong (perhaps the filmmaker is really a government spy and is lying).
   Until further notice expect Armstrong to keep finding these big turning points with alacrity.