Chart of the Day: The Turkey Problem Applied to Volatility

Nassim Taleb's Turkey Problem...

The Turkey Problem in Action... The volatility index, the VIX (last week)!

Discovery Process as Antidote to Chaos and Volatility

The prolific author Matthew Ridley at the Wall Street Journal reviews my favorite iconoclast Nassim Nicolas Taleb’s new book Antifragile

Discovery is a trial and error process, what the French molecular biologist François Jacob called bricolage. From the textile machinery of the industrial revolution to the discovery of many pharmaceutical drugs, it was tinkering and evolutionary serendipity we have to thank, not design from first principles. Mr. Taleb systematically demolishes what he cheekily calls the "Soviet-Harvard" notion that birds fly because we lecture them how to—that is to say, that theories of how society works are necessary for society to work. Planning is inherently biased toward delay, complication and inflexibility, which is why companies falter when they get big enough to employ planners.

If trial and error is creative, then we should treat ruined entrepreneurs with the reverence that we reserve for fallen soldiers, Mr. Taleb thinks. The reason that restaurants are competitive is that they are constantly failing. A law that bailed out failing restaurants would result in disastrously dull food. The economic parallel hardly needs spelling out.

The author is a self-taught philosopher steeped in the stories and ideas of ancient Greece (a civilization founded, of course, by traders like Mr. Taleb from Lebanon, as Phoenicia is now known). Anti-intellectual books aren't often adorned by sentences like: "I have been trying to bring alive the ideas of Aenesidemus of Knossos, Antiochus of Laodicea, Menodotus of Nicomedia, Herodotus of Tarsus, and of course Sextus Empiricus." So he takes his discovery—that knowledge and progress are bottom-up phenomena—and derives an abstract theory from it: anti-fragility.

Something that is fragile, like a glass, can survive small shocks but not big ones. Something that is robust, like a rock, can survive both. But robust is only half way along the spectrum. There are things that are anti-fragile, meaning they actually improve when shocked, they feed on volatility. The restaurant sector is such a beast. So is the economy as a whole: It is precisely because of Joseph Schumpeter's "creative destruction" that it innovates, progresses and becomes resilient. The policy implications are clear: Bailouts risk making the economy more fragile.

In short, tolerance of failures, errors and the acceptance of change through risk taking, as well as, learning from and improving on them signifies as an ideal way to deal with uncertainty from which progress springs.

Nassim Taleb on AntiFragility: 5 Rules Where Society can Benefit from Volatility

At the Wall Street Journal, my favorite iconoclast Black Swan theorist and author Nassim Nicolas Taleb explains his 5 rules where society can benefit from randomness, volatility or anti-fragility

Definition of fragility and antifragility:

Fragility is the quality of things that are vulnerable to volatility. Take the coffee cup on your desk: It wants peace and quiet because it incurs more harm than benefit from random events. The opposite of fragile, therefore, isn't robust or sturdy or resilient—things with these qualities are simply difficult to break.

To deal with black swans, we instead need things that gain from volatility, variability, stress and disorder. My (admittedly inelegant) term for this crucial quality is "antifragile." The only existing expression remotely close to the concept of antifragility is what we derivatives traders call "long gamma," to describe financial packages that benefit from market volatility. Crucially, both fragility and antifragility are measurable.

As a practical matter, emphasizing antifragility means that our private and public sectors should be able to thrive and improve in the face of disorder. By grasping the mechanisms of antifragility, we can make better decisions without the illusion of being able to predict the next big thing. We can navigate situations in which the unknown predominates and our understanding is limited.

Mr. Taleb’s five rules accompanied by excerpted elucidations (italics mine)

Rule 1: Think of the economy as being more like a cat than a washing machine.

We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

By contrast, natural or organic systems are antifragile: They need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times. Stifling natural fluctuations masks real problems, causing the explosions to be both delayed and more intense when they do take place. As with the flammable material accumulating on the forest floor in the absence of forest fires, problems hide in the absence of stressors, and the resulting cumulative harm can take on tragic proportions…

Rule 2: Favor businesses that benefit from their own mistakes, not those whose mistakes percolate into the system.

Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash. A tragedy leads to the thorough examination and elimination of the cause of the problem. The same thing happens in the restaurant industry, where the quality of your next meal depends on the failure rate in the business—what kills some makes others stronger. Without the high failure rate in the restaurant business, you would be eating Soviet-style cafeteria food for your next meal out.

These industries are antifragile: The collective enterprise benefits from the fragility of the individual components, so nothing fails in vain…

Rule 3: Small is beautiful, but it is also efficient.

Experts in business and government are always talking about economies of scale. They say that increasing the size of projects and institutions brings costs savings. But the "efficient," when too large, isn't so efficient. Size produces visible benefits but also hidden risks; it increases exposure to the probability of large losses. Projects of $100 million seem rational, but they tend to have much higher percentage overruns than projects of, say, $10 million. Great size in itself, when it exceeds a certain threshold, produces fragility and can eradicate all the gains from economies of scale. To see how large things can be fragile, consider the difference between an elephant and a mouse: The former breaks a leg at the slightest fall, while the latter is unharmed by a drop several multiples of its height. This explains why we have so many more mice than elephants…

Rule 4: Trial and error beats academic knowledge.

Things that are antifragile love randomness and uncertainty, which also means—crucially—that they can learn from errors. Tinkering by trial and error has traditionally played a larger role than directed science in Western invention and innovation. Indeed, advances in theoretical science have most often emerged from technological development, which is closely tied to entrepreneurship. Just think of the number of famous college dropouts in the computer industry.

But I don't mean just any version of trial and error. There is a crucial requirement to achieve antifragility: The potential cost of errors needs to remain small; the potential gain should be large. It is the asymmetry between upside and downside that allows antifragile tinkering to benefit from disorder and uncertainty…

Rule 5: Decision makers must have skin in the game.

At no time in the history of humankind have more positions of power been assigned to people who don't take personal risks. But the idea of incentive in capitalism demands some comparable form of disincentive. In the business world, the solution is simple: Bonuses that go to managers whose firms subsequently fail should be clawed back, and there should be additional financial penalties for those who hide risks under the rug. This has an excellent precedent in the practices of the ancients. The Romans forced engineers to sleep under a bridge once it was completed…

Read the rest here

In complex systems or environments, it is a mistake to see the world as operating mechanically like a ‘textbook engineering problem’ where any presumption of knowledge applied through social policies only leads to greater volatility and risks. 

Differently said, social policies that have been averse to change or designed to eliminate change leads to unintended consequences. Economist David Friedman’s take on the mistake of adhering to the change averse "precautionary principle" rhymes with Mr. Taleb’s antifragile concepts.

Also the idea of centralization only concentrates systemic risks and volatility. Whereas decentralization not only distributes and reduces the impact of volatility but also encourages innovation and thus progress.

Bottom line: Randomness, volatility and antifragility is part of human life. Society would benefit more by learning and adapting. Decentralized institutions are more suited to deal with antifragility. Presuming away the reality of change, which has been embraced by populist politics, only defeats the 'feel good' and ‘noble’ intentions of such social policies.

Quote of the Day: Marginal Utility: The Essence of Life is Some Volatility

Consider that all the wealth of the world can't buy a liquid more pleasurable than water after intense thirst. Few objects bring more thrill than a recovered wallet (or laptop) lost on a train.

The essence of life is some volatility.

This is from Black Swan author Nassim Nicholas Taleb (Facebook page link)

Worth Doing: Inflation Analytics Over Traditional Fundamentalism!

``Economics is not about goods and services; it is about the actions of living men. Its goal is not to dwell upon imaginary constructions such as equilibrium. These constructions are only tools of reasoning. The sole task of economics is analysis of the actions of men, is the analysis of processes.”- Ludwig von Mises Logical Catallactics Versus Mathematical Catallactics, Chapter 16 of Human Action

Marketing guru Seth Godin has this fantastic advice on quality,

``When we talk about quality, it's easy to get confused.

``That's because there are two kinds of quality being discussed. The most common way it's talked about in business is "meeting specifications." An item has quality if it's built the way it was designed to be built.

``There's another sort of quality, though. This is the quality of, "is it worth doing?". The quality of specialness and humanity, of passion and remarkability.

``Hence the conflict. The first sort of quality is easy to mandate, reasonably easy to scale and it fits into a spreadsheet very nicely. I wonder if we're getting past that.

In essence, everything we do accounts for a tradeoff. When we make choices it’s always a measure of acting on values.

For instance, the “quality” of providing investment advisory is likewise a tradeoff. It’s a compromise between the interests of investors relative to the writer and or the publisher. It’s a choice on the analytical processes utilized to prove or disprove a subject. It’s a preference over the time horizon on the account of the investment theme/s covered. And it’s also a partiality on the recommendations derived from such investigations.

So “meeting specifications” which is the conventional sell side paradigm has mainly the following characteristics, it is:

-short term oriented (emphasis on momentum or technical approaches),

-frames studies based on “spreadsheet variety” (reduces financial analysis to historical performance than to address forward dynamics),

-serves to entertain more than to advance strategic thinking,

- promotes heuristics or cognitive biases

-upholds the reductionist perspective or the oversimplified depiction of how capital markets work and

-benefits the publisher more than the client (Agency Problem)

Yet many don’t realize this simply because this has been deeply ingrained into our mental faculties by self serving institutions that dominate the industry.

And instead of merely meeting the specifications which is the norm, here we offer the alternative-the “is it worth doing?” perspective.

Why?

-Because we realize that successful investing comes with the application of the series of "right" actions based on the “right” wisdom and rigorous discipline.

And with “right” wisdom comes the broader understanding of the seen and unseen effects of government policies that IMPACT asset markets or the economy more than just the simplistic observation that markets operate like an ordinary machine with quantified variables.

-Because government policies shape bubble cycles which underpins the performance of asset prices.

Think of it, if markets operate unambiguously on the platform of “valuations” or the assumption of the prevalence of rational based markets, then bubble cycles won’t exist.

Hence, the failure to understand policy directions or policy implications would be the Achilles Heels of any market participant aspiring success in this endeavor.

For instance, with nearly 90% of oil reserves or supplies under government or state owned institutions, any analysis of oil pricing dynamics predicated on sheer demand and supply without the inclusion of policy and political trends would be a serious folly or a severe misdiagnosis.

Of course, money printing by global central banks adds to the demand side of the oil equation. Moreover, price control policies can be an interim variable. The recent attempt to curb speculative trading in oil can be construed as a significant factor for the recent oil collapse in oil prices.

-And also because I try to keep in mind and heart Frederic Bastiat’s operating principle, ``Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil.”

In short, the seen and unseen effects of policy actions and political trends are the operating dynamics from which underlines our “is it worth doing?” perspective.

Financial Markets As Fingerprints

We have repeatedly argued against the mainstream and conventional view that micro fundamentals drives the markets [see Are Stock Market Prices Driven By Earnings or Inflation?].

Stock markets, for us, have been driven by principally monetary inflation, and secondarily from sentiment induced by such inflation dynamics. All the rest of the attendant stories (mergers, buyouts, fundamentals such as financial ratio, etc…) function merely as rationalizations that feeds on the public’s predominant dependence on heuristics as basis of decisions in a loose money landscape.

In an environment where liquidity is constrained, no stories or financial strength have escaped the wrath of the downside reratings pressure.

The disconnect between market price actions over the performance of corporate financials or the domestic economy have been conspicuous enough during the last bull (2003-2007) and bear cycles (2007-2008) to prove our assertion.

Moreover, up to this point our skeptics haven’t produced any strong evidence to refute our arguments. Instead we had been given a runaround, alluding to some regional securities as possible proof of exemptions.

Here we discovered that inflation and inflation driven sentiment seem to apply significantly even in the more sophisticated markets of Asia as well.

So, instead of weakening our arguments, the wider perspective has even reinforced it.

Moreover, financial markets shouldn’t be seen as operating in uniform conditions. Such reductionist view risks glossing over the genuine internal mechanisms driving the markets. The underlying structure of every national financial markets appear like fingerprints-they are unique.

For instance, they have different degrees of depth relative to the national economy as seen in Figure 1.

Figure 1: McKinsey Quarterly Mapping Global Capital Markets Fifth Annual

The McKinsey Quarterly map reveals of the extent of distinction of financial market depth across the world. Yet growth dynamics are underpinned by idiosyncratic national traits.

So it would be an “apples to oranges” fallacy to take the Philippines as an example to compare with the US markets or other markets in trying to ascertain the degree of “fundamentals” affecting price actions versus the inflation perspective.

Finding scant evidence that the Philippine market is driven by fundamentals, we’ll move to ascertain the impact of inflation to US markets-the bedrock of the capital markets.

The US has deeper and more sophisticated markets, where [as we pointed out in PSE: The Handicaps Of A One Directional Reward Based Platform] investors can be exposed to profit from opportunities in all market directions- up, down and consolidation, given the wide array of instruments to choose from, such as the Exchange Traded Funds, Options, Derivatives and other forms of securitization vehicles.

This leads to more pricing efficiency in relative and absolute terms.

This also implies that deeper and more efficient markets tend to be more complicated. Nonetheless this doesn't discount policy induced liquidity as a significant variable affecting asset pricing.

In lesser efficient markets as the Philippines or in many emerging markets, the lesser the sophistication and the insufficient depth accentuates the liquidity issue.

The fact that the broad based global meltdown in 2008 converged with almost all asset markets except the US dollar, had been a reflection of liquidity constraints as a pivotal factor among other variables.

S&P 500 Total Nominal Return Highlights Rapid Inflation Growth!

Since we don’t indulge in Ipse Dixitism, the proof in the pudding, for us, is always in the eating.

Figure 2: Investment Postcards: Components of Equity Returns

This excellent chart from Prieur Du Plessis’ Investment Postcards (see figure 2) showcases the categorized return of equity capital since 1871. That’s 138 years of history!

Says Mr. Plessis, ``Let’s go back to the total nominal return of 8.7% per annum and analyze its components. We already know that 2.2% per annum came from inflation. Real capital growth (i.e. price movements net of inflation) added another 1.8% per annum. Where did the rest of the return come from? Wait for it, dividends - yes, boring dividends, slavishly reinvested year after year, contributed 4.7% per annum. This represents more than half the total return over time!”

While it is true that dividends accounted for as the biggest growth factor in equity returns in the S&P 500 benchmark yet, where inflation so far has constituted about 25.3% (2.2%/8.7%) of total returns, what has been neglected is that rate of growth of inflation has far outpaced the growth clip of both capital and dividend growth.

Notice that inflation had been a factor only since the US Federal Reserve was born in 1913. Prior to 1913, equity returns had been purely dividends and capital growth.

And further notice that the share of inflation relative to total returns has rapidly accelerated since President Nixon ended the Bretton Woods standard by closing the gold window in August 1971 otherwise known as the Nixon Shock.

To add, the share of inflation has virtually eclipsed the growth in real capital!!!

In other words, investing paradigms predicated on the pre-inflation to moderate inflation era will unlikely work in an environment where inflation grows faster than dividends or capital.

Hence it is a folly to latch on to the beliefs of “fundamental driven” prices without the inclusion of policy induced inflation in the context of asset pricing.

This is a solid case where past performances don’t guarantee future outcomes!

To further add, if inflation has a growing material impact to the pricing of US equity securities, then the degree of correlation with the rest of the global markets must be significantly greater under the premise of market pricing efficiency.

Policy Induced Volatilities Against Mainstream Fundamentalism

Here is more feasting on the pudding (this should make me obese).

Figure 3: Hussman Funds Secular Bear Markets And The Volatility Of Inflation

Another outstanding chart, see figure 3, this time from William Hester of Hussman Funds.

Mr. Hester uses the volatility of inflation as a proxy for economic volatility.

In the chart, low inflation volatility extrapolates to higher price P/E multiples and vice versa.

Here it is clearly evident that when volatility is low, bubble valuations emerge (left window), whereas the regression to the mean from excessive valuations occurs when volatility of inflation or economic volatility is high (right window).

Mr. Hester adds, ``It's not only the level of volatility and uncertainty in the economy that matters to investors, but also the trend and the persistence in this uncertainty. Shrinking amounts of volatility in the economy creates an environment where investors are willing to pay higher and higher multiples for stocks, while growing uncertainty brings lower and lower multiples.” (bold highlight mine)

So, it isn’t just economic volatility (as signified by inflation) but uncertainty as a major contributory factor to the gyrations of price earning multiples.

And where does “uncertainty” emanate from?

It is rooted mostly from government intervention or political policies instituted by governments, such as protectionism, subsidies, higher taxes et. al.. or any policies that fosters “regime uncertainty” or ``pervasive uncertainty about the property-rights regime -- about what private owners can reliably expect the government to do in its actions that affect private owners' ability to control the use of their property, to reap the income it yields, and to transfer it to others on voluntarily acceptable terms” as defined by Professor Robert Higgs.

In actuality, Mr. Hester’s technical observations of the proximate correlations of inflation and price/earnings multiples is a reflection or a symptom of the operational phases of the business cycles.

As depicted by Hans F. Sennholz in the The Great Depression, ``Like the business cycles that had plagued the American economy in 1819–1820, 1839–1843, 1857–1860, 1873–1878, 1893–1897, and 1920–1921. In each case, government had generated a boom through easy money and credit, which was soon followed by the inevitable bust. The spectacular crash of 1929 followed five years of reckless credit expansion by the Federal Reserve System under the Coolidge administration.” (bold highlights mine)

So it would be plain shortsightedness for any serious market participants to blindly read historical “fundamental” performances and project these into future prices while discounting political or policy dimensions into asset pricing.

As we noted in last week’s Inflation Is The Global Political Choice, the financial and economic milieu has been hastily evolving post crash and is likely being dynamically reconfigured from where asset pricing will likewise reflect on such unfolding dynamics, ``the unfolding accounts of deglobalization amidst a reconfiguration of global trade, labor and capital flow dynamics, which used to be engineered around the US consumer, will likely be reinforced by an increasing trend of reregulations which may lead to creeping protectionism and reduced competition and where higher taxes may reduce productivity and effectively raise national cost structures, as discussed in Will Deglobalization Lead To Decoupling?”

Hence, any purported objectives to attain ALPHA without the context of the measurable impact from policy or political dimensions over the long term are inconsistent with the intended goals.

Instead, these signify as lamentable and plaintive quest for short term HOLY Grail pursuits which is not attributable to investing but to speculative punts.

Hence, traditional “fundamentalism” serves as nothing more than the search for rationalizations or excuses that would conform to cognitive biased based risk taking decisions.

It’s not objectivity, but heuristics (mental shortcuts or cognitive biases) which demands for traditional fundamentalism metrics since evolving market and economic realities and expectations don’t match.

Under A New Normal, Old Habits Die Hard

London School of Economics Professor Willem Buiter [in Can the US economy afford a Keynesian stimulus?] makes the same policy based analysis when he predicts that the US will prospectively underperform the global markets due to the political direction,

``There is no chance that a nation as reputationally scarred and maimed as the US is today could extract any true “alpha” from foreign investors for the next 25 years or so. So the US will have to start to pay a normal market price for the net resources it borrows from abroad. It will therefore have to start to generate primary surpluses, on average, for the indefinite future. A nation with credibility as regards its commitment to meeting its obligations could afford to delay the onset of the period of pain. It could borrow more from abroad today, because foreign creditors and investors are confident that, in due course, the country would be willing and able to generate the (correspondingly larger) future primary external surpluses required to service its external obligations. I don’t believe the US has either the external credibility or the goodwill capital any longer to ask, Oliver Twist-like, for a little more leeway, a little more latitude. I believe that markets - both the private players and the large public players managing the foreign exchange reserves of the PRC, Hong Kong, Taiwan, Singapore, the Gulf states, Japan and other nations - will make this clear. There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard.” (bold highlights mine)

Indeed, old habits, mainstream but antiquated beliefs are even more difficult to eliminate.

Figure 4: John Maudlin/Safehaven.com: Buddy, Can You Spare $5 Trillion?

In an environment where the dearth of capital will be overwhelmed by the expansive liabilities of global governments deficit spending policies [see figure 4], the underlying policy trends will determine, to a large extent, the dimensions of asset pricing dynamics.

And as we noted last week, deficits won’t be the key issue but the financing. Here a myriad of variables will likely come into play, ``the crux of the matter is that the financing aspect of the deficits is more important than the deficit itself. And here savings rate, foreign exchange reserves, economic growth, tax revenues, financial intermediation, regulatory framework, economic freedom, cost of doing business, inflation rates, demographic trends and portfolio flows will all come into play. So any experts making projections based on the issue of deficits alone, without the context of scale and source of financing, is likely misreading the entire picture.”

Yet, like us, PIMCO’s Bill Gross in his June Outlook sees a “New Normal” environment where investing strategies will have to be reshaped.

``It is probable that trillion-dollar deficits are here to stay because any recovery is likely to reflect “new normal” GDP growth rates of 1%-2% not 3%+ as we used to have. Staying rich in this future world will require strategies that reflect this altered vision of global economic growth and delevered financial markets. Bond investors should therefore confine maturities to the front end of yield curves where continuing low yields and downside price protection is more probable. Holders of dollars should diversify their own baskets before central banks and sovereign wealth funds ultimately do the same. All investors should expect considerably lower rates of return than what they grew accustomed to only a few years ago. Staying rich in the “new normal” may not require investors to resemble Balzac as much as Will Rogers, who opined in the early 30s that he wasn’t as much concerned about the return on his money as the return of his money.” (bold highlights mine)

So yes, ALPHA can only be achieved with respect to the understanding of the scope and scale of policy and political trends and its implication to the sundry financial assets and to the global and local economy as well as to industries. For instance, industries that have endured or will see expanded presence of the visible hand of governments will have systemic distortions that may nurture bubble like features of expanded volatility or could see underperformance over the long run.

And any models or assumptions built around traditional metrics are likely to be rendered less effective than one which incorporates political and policy based analysis.

In short, like it or not, in the environment of the New Normal, government inflation dynamics will function as the zeitgeist which determines financial asset pricing trends.

This brings us back to the issue of quality. For us, in almost every sense, it appears that the "is it worth doing?" perspective is the more profitable approach than simply abiding by the conventional “meeting specifications”.

Nonetheless for those who can’t rid themselves of such archaic habits, we suggest for them to enroll in local stock market forums where traditional fundamental information from diverse sellside sources or even rumor based information can possibly be obtained for free! Forums are recommended sources of information for short term players seeking market adrenalin and excitement.

A Critical Week for US Markets? Will A Bottom Be Forged?

A “Bottom” is an indispensable part of the market cycle.

It doesn’t translate to the popular impression of fantasizing about identifying a precise low, which should be the work of tarot card readers.

It means that bottom as a cycle involves time process.

Of course, it is a truism that bottom can always be seen from the privilege of fait accompli.

But in looking forward, anticipating a market bottom can be assessed from valuations view point (example below)…

Courtesy of Bespoke Investment

or from sentiment…

Courtesy of stockcharts.com

or from technical formations or patterns such as W,U,V or other variations based from historical performances...

Courtesy of US global Investors

Courtesy of US global Investors

Courtesy of US global Investors

or a combination thereof.

Remember, there is no simplified answer, formula or a Holy Grail for this.

This also means anticipating market bottoms can also be construed as a bet based on probabilities: that in considering the tradeoff between risk vis-à-vis return, the estimated returns should vastly outweigh risks given an expected time horizon regardless of the day to day activities reflected in the tape.

Courtesy of US global Investors

And perhaps US markets could have been attempting to forge a bottom, where the critical landmark for either a success or failure of market’s attempt to its floor could be shaped or determined over the coming sessions (days or weeks) by virtue of market action.

According to John Derrick of US Global, ``History shows that three-quarters of the retesting events occurred within 44 days of a bottom, so if the October 10 low in fact marked a bottom, a retest (which could create a new low) should be expected prior to November 23. The longest span for retesting a low was 104 days in 2002. A repeat of that extreme case would schedule the retest for January 22, 2009.” (highlight mine)

Of course any successful recovery from the repeated retests of the October 10 lows could also translate to an interim bottom more than the “THE” Bottom.

Although again bottom as a market cycle, like wine, ages with time.

But for the meantime market action says: Fasten your seat belts.