Bull’s Eye Investing

Bull’s Eye Investing is a book by John Mauldin. When I found it in the local library I was impressed by the amount of useful information it provides. The byline “Targeting Real returns in a Smoke and Mirrors Market” is so consistent with my own attitude.

The final thing that convinced me to read the book was noticing that on page 23 there is a graph showing the relationship between the demographics of age distribution and real S&P price-earnings ratios over the last century. Mauldin uses this in 2004 to announce the imminent arrival of a bear market. It is clear that PE ratios are to move from the vicinity of 30 to somewhere in the region of 5 to 16. That is a very substantial adjustment to happen over a 20 year period.

Here is the graph referred to:

realtionship between demographics and PE-ratioThe graph is originally from a paper DEMOGRAPHY AND THE LONG-RUN PREDICTABILITY OF THE STOCK MARKET By John Geanakoplos, Michael Magill and Martine Quinzii. It contains other useful analysis supporting the relationships mentioned.

I have long advocated the importance of age distribution demographics on economic processes, and I consider that most economists do not understand these things. For example my paper on the Cause of the Kondratieff Cycle.


About Ray Tomes

Ray's career was in computer software development including system software design, economic modeling, investments. He spent 15 years full time on cycles research and has spoken on cycles and related topics at conferences and seminars around the world. He retired at age 42 to study cycles full time and work out “The Formula for the Universe” and as a result developed the Harmonics Theory as an explanation for observed patterns of cycles and structure of the Universe. His current project is the development of CATS (Cycles Analysis & Time Series) software, and collecting and organizing large quantities of time series data and analyzing this data to test and confirm Dewey's findings in an organized way. Interested in all aspects of cycles especially climate change and causes.
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One Response to Bull’s Eye Investing

  1. Ray Tomes says:

    David informs me:

    Two small details which might cause some confusion:
    – the software will analyse cycles down to 3 minutes, but you could only
    actually trade cycles down to about 20 minutes, because it uses the shorter
    cycles to make decisions.

    – you mention that the software will trade directly without human
    intervention. In fact the version of the software that we sell doesn’t do
    this because of legal reasons. I am the only person who has a version that
    can do this! The software for sale does this with minimal human intervention
    (clicking an OK button).

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