Friday, January 15, 2010

Analyzing the Stock Market through Bazi (Part II)

In Part I, I posted the theory of using Pillars to analyze the market. Today post, I will relate it to the historical events.

Major Historical Trend

1909-1910 the Shanghai Rubber Stock Market Boom & Bust

In 1909, Ji You year, the You Rooster appeared. In this regard the metal element became prominent. Hence, you can expect a positive aspect in the Stock Market industry.

At the beginning of the twentieth century, the development in the rubber industry Malaya attracted the attention of London investors. Capital was raised by them not only in Great Britain but also from other countries like China and within Malaya.

In 1903, an Englishman founded a rubber stock company, the Langezhi Development Company, in Shanghai to develop rubber industry and open a new rubber house. In 1909 the world price of rubber increased sharply, those investors received a bountiful return on their investments. The Englishman took this chance to promote the sales of rubber stock. The investment was associated with huge returns. Some of the prominent British agent companies, Jardine, Matheson & Co Many also promoted the buying and selling of the rubber stock. Investors rushed into the market, thus the Langezhi shares prices rose sharply above its original face value. Foreign bankers also accepted speculators' properties as collateral to borrow cash for the stock. This results in oversubscription of Langezhi's stocks. There was no guarantee to shareholders. In 1910, the news of uncertain return came out as well as the disappearance of the Englishman in July 1910 caused the overheated rubber stock to collapse. Many Shanghainese Bank such as Zhengyuan, Qianyu, Zhoakangand and the famous Yaunfrengrun were caught off guard had to declare bankruptcy. Foreign banks were also caught in the crisis, dragging western houses involved in the panic.

In 1910, Geng Xu, the Xu was in a harm relationship with You. In July 1910, is the month of Wei together with Xu and Chou formed the Bullying Punishment. Hence, the collapse of the rubber stock and the chained reaction involved with the bankers.

1900-1939 Industrial Age and Great Depression

During the 1900s up till 1929, the stock markets of the world were supported and powered by the industrialization age where new invention and mass manufacturing of goods (such as the first auto assembly line during 1913, mass production of radio in 1921, first public Tv, Lindbergh flight and first "talkie" in 1927, automatic bread slicer and first colour movie in 1928) flooded the economy. This era was associated with the metal element which greatly supported the Three Harmony Combination. During this period, there were smaller cycle of bearish market but the general global economy as well as stock market was trending up.

World War I began in 1914, Jia Yin year. The 1914, Jia Yin year was a pure Qi of Jia Wood which clashed with the metal element. The Yin Tiger was also a harm relationship with the Si Snake. Hence, the New York Stock Exchange was closed 31 July 1914 and only re-opened partially on 28 November at a much lowered index level in the same year. The Jia Yin was also the wealth element to the metal. However, wealth will on be felt later in the following year of Yi Mao, where there was a leap in the stock market activities. The same trend was noted in 1974 another Jia Yin year.

If you think with a logical deduction, the war required a mass manufacturing of weaponries tools like artillery and guns. This will spurred the growth in the manufacturing industry again a supportive scenario to the stock market. Hence, in 1915, in the Yi Mao year the stock market rose sharply which last till 3rd quarter of 1917 with a few small deep in 1916. 1918 was when the war end. In 1917, Ding Si, almost toward the end of the war whereby demand for weaponry slows down and the stock market likewise will trend down. In 1917, Ding Si was a strong fire element which was not conducive to metal element.

Another way of reading: The Si Snake was part of the Three Harmony Combination. Does another Si Snake appear on the Annual Pillar came in to support or vie away the collaboration? This depended on whether the element appeared on the stem for the year was constructive to the pack. In this case, the Ding Fire was not.

In 1921, Xin You, saw a steady rise in the stock market that last till the 3rd quarter of 1929. As with other You Rooster years which indicated a trend where the bear market ended and the beginning of the bull market except 1957, Ding You and 1969 Ji You.

In October 1929, Ji Snake, the stock market recorded the greatest crash in history and it also marked the beginning of Great Depression. The Great Depression does not just affect the US but was also severe worldwide economic depression that lasted a decade. Again the Si Snake appeared that seems to strength the Si~You~Chou. However on the annual stem, the Ji Earth (which supposed to produce metal) was to dry and parch to produce the metal but it distorted the view of the people in the background. Many at the time had unreasonable expectation of high returns for their investment.

The Great Depression lasted until 1939 just before the World War II. However, market had started to grow in 1933, Gui You. Economy started it slow recovery too.

What has spurred this recovery?

Gold Standard, a monetary system in which currency was backed by gold, was dropped by Britain and Sweden in 1931 and soon followed by other European countries.

The Gold Standard was marked as being dropped by Central Banks in the world in favour of "fiat money" was when US, global economy giant, went off the gold standard on 5 June 1933. Then US adopted Keynesian economic theory, whereby the best ways to fight off an economic downturn was to inflate the money supply. "Fiat money" was less tangible in term of value (a piece of IOU paper guarantee by the government) and more liquid exactly like the Gui Water on the stem in 1933, Gui You.

One country were unaffected by the great depression during 1930s. It had a Gold Standard and Silver Standard to back it currency at the point of time. Make a guess which country was that?

1973-1974 Oil Crisis

The Gui Chou Pillar itself showed an image of crude oil. The Chou Ox which should be supporting the metal combination did not do so. In this case, you had a case where the muddy soils stuck to the metal. A very much dirty and sticky situation at hand.

The oil crisis started in October 1973, Gui Chou, when the members of the OAPEC (consisting of the Arab members of OPEC, plus Egypt and Syria) declared an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974 caused the global market to crash. The embargo resulted rising oil price that caused an inflationary pressure around the world which followed by the collapse on the monetary system. The chained effect caused the global stock market crashed.

In 1974 like the year 1914, the metal and wood clash indicated market collapse. As in 1915, the following year for 1974 that was 1975, the market went up steeply.

1980s Latin American Debt Crisis

In 1982, the Xu Dog harmed the You Rooster and formed a half Bullying Punishment. The Dow Jones Industrial Index took a small deep during August 1982.

The 1980s Debt Crisis was mostly affected the Latin America countries notably Brazil, Argentina, and Mexico, who had borrowed huge sums of money from international creditors for industrialization.

Although the problem mostly contained to the Latin America, it was worth a look how the year affect the theory above. I would think and individual stock market chart would give more an accurate picture here.

In 1982, Ren Xu, the crisis began when international creditor started to realized that the Latin American countries no longer able to pay back its loan. It began with Mexico on August 1982 when Mexico's Finance Minister, Jesus Silva-Herzog, declared that Mexico would no longer be able to service its debt

1987 Black Monday

The Mao Rabbit clashed into the You Rooster in the Combination. The strong Ding Fire which sat on the Resource Star was not conducive to the metal combination as well. Ding also clashed with the Gui Water indicated a sudden unexpected event.

The 19 October 1987 recorded an historical event that recorded the world stock markets largest dropped in a day. It remained a mystery as to why the market took a dive on that day.

1989-1991 Economic Recession (United States Savings & Loan Crisis Lead)

In 1990, Geng Wu, the Wu Horse harmed the Chou Ox in the combination. Wu and You were also in a destruction mode. The Geng Metal revealed on the stem point out the fact that problem related to the loose regulation on the saving and loan industry and this mostly affected the western country.

North America troubled savings and loans industry was beginning to collapse, leading to a savings and loan crisis which put millions of Americans in to financial jeopardy. The panic that followed led to a sharp recession that hit hardest those countries most closely linked to the US, including Canada, Australia, and the United Kingdom. The economies of much of Europe and Japan were not hurt as badly.

The stock markets took a deep in 1990.

Guys! Are you still there? I know! I know! This is very long and some more no pictures. Just the stupid chart on top, showing a few haphazard lines. It begins to sound boring. Be with me okay. It is almost coming to the end. We already reached 1990s, not very long, ya. Just another decade or so.

1997-1998 Asian Financial Crisis

In 1997, Ding Chou year, seems to support the Metal combination. And it did until the summer month. The Ding Fire began to take prominent during the peak summer onwards and it countered the metal.

The Asia Financial Crisis started in Thailand in July 1997, Ding Wei month. Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. The crisis spread, most of Southeast Asia, like Indonesia, South Korea Hong Kong, Malaysia, Laos Philippines and Japan. Japan's currencies, stock markets and other asset prices were devalued, and rose in private debt. The crisis raised fears of a worldwide economic meltdown due to financial contagion.

In 1998, Wu Yin, most of the countries still suffered the effect of the crisis and only began to recover in 1999.

2000-2001 Dot-com Bubble

In 2000, Geng Chen, harmed the You Rooster and on destructive mode with the Chou in the metal combination. In 2001, Xin Si year, I called it an eclipse of the Xin Si with Three Harmony Combination.

The dot com boom refer to the steady commercial growth of the Internet with the dawn of the world wide web as with the first release of the Mosaic web browser in 1993 and continuing through the 1990s.

Over the period of 1998-2000, a combination of rapidly increasing stock prices, market overconfidence that the dot com companies would turn future profits, individual speculation in stocks, and widely available venture capital created an environment in which many investors were willing to overlook traditional fundamentals and give in to the "good felling of market sentiment" at that point of time.

On the 13 March 2000, the stock market began to slide downward as the dot-com companies one by one filed in bankruptcy and by 2001 the stock market was going downwards at full speed.

2007-2010 Financial Crisis

In 2007, Ding Hai year and the Hai Pig clashed with the Si Snake.

The stock market only registered the effect at end of 2007.

The financial crisis began with the US property bubble. At the point of time, the US housing market began to crack as lender faced foreclosures. It spiraled into a sub-prime crisis and affected the banking and finance sector. The crisis rapidly developed and spread into a global economic shock, resulting in a number of European bank failures, declines in various stock indexes, and large reductions in the market value of equities and commodities. The crude oil price rose also added new inflationary problem to the crisis. It had caused the global economy to go in to recession which still are not fully recover yet till now.

In 2008, Wu Zi year, the stock market continued to suffer. However, some of the Asia countries posted better performance toward the end of the year.


Major cycle vs minor cycle

The theory using the Three Harmony Combination, Si-You-Chou, does conform to the major trend of the global stock market and economy. A further check on the yearly or minor cycle, however, gives some weakness especially in the Shen Monkey year. When the stock market was going through the up-trend, and whereby the year pillar does not supported the Three Harmony Combination, the stock market still performing well but with more volatility.

Hence, I can only conclude that the theory give about 70 to 80 percent accuracy with less on minor cycle.

Looking ahead in 2010

Year 2010 is a Geng Yin year. Looking back in 1950 which was also a Geng Yin, the stock market was going on an up-trend. However it took a slight deep on the month of July 1950 and picked-up again till the year end.

The 2010 the stock market is also on the up-trend. If it follows the Geng Yin year of the 1950, the market will take a fall in the second half of the year as many of the analysts as well as Chinese Metaphysics have forecasted for 2010.

However, I advocate a slight difference that is the market will make the correction in May 2010 before the second half of the year due to the month pillar of Xin Si. Remember, the eclipse I mentioned earlier.



Anonymous said...

I felt like reading Economics history right now,nevertheless it was a breath-taking one! Keep it up~

Loyal Follower

Josephine said...

/wahaha Yes, it was an economics history. Just want to make sure that my analysis will not be out. So need to check the history for the future, I guess.

Glad that you still find it interesting cause half-way thru, I am already bored. =))