Predictions

by jim goulding

 

I make predictions for a living. Everything I do, in the economic world, is in-service to predicting the future. From 5 minutes to 5 years, I want to know what's going to happen. This page is about some of my macro predictions.

 

Predicting where society is going is the secret. If you know what books to search in, you can predict what will happen to society on a macro level very easily. I know what books to look at and how to apply the methodology.

 

For example, I can tell you with the utmost confidence

• where the economy will be in 1,5,10 or 50 years. 

• many different trends in society and how they'll play out

• how to advertise to this or that demographic

• the list is endless!

How do I know? Because after years of research, I know where to look.

 

Web Page Navigation Area

 

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  Introduction

Predicting the future is what I do for a living. Almost everything on my web site is in service to trying to predict the future. That's because I'm a trader. I trade the markets, design trades, coach traders, and run a small research department for a Broker/Dealer, here in Chicago. Currently I concentrate on short term time frames like the next 5-30 minutes, constantly asking the question, "where is this market going". Today it's the Oil, Heating Oil, & Treasury markets that I'm trading.

 

To reach any sort of success as a short-term time-frame trader you must understand what's going on in the long- term. Macro and micro are correlated. This page will start out as a page showing some of my longer term prediction that came true. I'm sure it will manifest into something different as time goes on but the theme will stay the same. That is, what is going to happen in the future?

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 Currently      

 DJIA

    I've been bullish the Dow Jones Industrial Average (DJIA) since I wrote the book, Winter is Coming. In that book I wrote that the DJIA would go to 35,000 by 2009. (The book was written in 2003.) You may download the book for free if you'd like to read the chapter.

    Below are a collection of my posts about the market. Original dates and times are listed and the content hasn't been edited. The latest post is at the top, earliest is at the bottom. These are posts that I've made to some electronic boards and to friends of mine, in emails.

    After the postings immediately below I have two postings from August 2003 and March 2006.

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07-07-08

Predictions Update

 For the first time since I began predicting the rise in the DJIA, I’m very nervous. Before, I could state without a doubt, that the DJIA was going higher. However, as I wrote in my last update, the closer we get to the crash, the harder it is to predict. So, I must look at some of my original thoughts about what moves the markets, what I’ve learned in the last six-years, and the triggers that send our economy into 80-year cycles.

 Personally, I’ve been struggling emotionally with the downturn in the economy because I know that, August 2007, was the beginning of what I call the 3-year warning (more on that later). The point is that I’ve written several times that regardless of where the DJIA is, in late 2008, I really have to think about getting out of the market. Said differently, if the DJIA doesn’t hit 35k and it’s late 2008, forget about the 35k prediction and take things as they come…look at getting out. I’ll cover the ‘why’ in this update. Lastly, when I say I’m struggling emotionally, I mean it. This is so depressing. I never wanted the prediction of the economy crashing to come true, yet, it is. I think of all the people (99%) in this country (and around the world) who don’t have a clue that they are about to get hit by an 80-year economic tsunami. In America, most think they’ll be bailed out. Not this time.

 Let’s get to the analytics and put emotions away. Let’s go back to some of my original conclusions about what leads the economy to an 80-year crash. (By the way, this is a macro-science. It may be 80 years, it may be 85. That’s what makes it so difficult to nail-it as its happening.)

 The single largest catalyst for the US economy moving into an 80-year cycle (massive slowing, crash, whatever you want to call it) is the line-up of the generations. That ‘line-up’ took place in 2003 (see my free book, Winter is Coming, chapter 3, for further explanation).  So, I can conclude, that catalyst is in place.

 Another catalyst is an economic event that hits the economy hard but doesn’t push it into a depression. Something similar to the 1926 Florida real estate crash, or, the August 2007 subprime crash. The similarities between the crashes and the era are very similar. What’s on everyone’s mind now, in 2008, is “was the August 2007 crash the beginning of the meltdown?” That’s the same thing folks were asking in 1926. The answer is…’Yes it is the beginning, but there’s still time to get out on a rally, like there was in 1926, 1927, and 1928, before the larger problems set into the economy. What I know right now is that the August 2007 subprime crash is a catalyst, and that catalyst is in place.

 One of the other catalysts that I was looking for was the movement of gold out of the US by the Federal Reserve. However, they took the ability to gage that movement away with the creation of gold swaps. You can see the data here: http://www.federalreserve.gov/releases/bulletin/0508assets.htm .

 The problem with the data is that the fed created a swap arrangement with other central banks, so, you can’t see when they move the gold. The ‘Gold stock’ has been at 11 billion for years. The problem? That gold may not be there anymore. They could have swapped it out for any asset they wanted under the swap agreements. So, that indicator is dead-in-the-water.

 The housing study I produced back in 2002 is another indicator that stated the number of buyers for upscale homes (above 500k, in 2002 dollars) would run out in January 2006.  So, we know that indicator is in place.

 The indicator that hasn’t kicked in yet, the one that I’m waiting for, will be the nail-in-the-coffin. That indicator is provided by the FED. It goes something like this: The fed must go on a hiking binge. I warn you, read that again before coming to a conclusion. I’m not talking about a 1-and-done, like the ECB did on July 3^rd, 2008. I’m talking about a hiking campaign. More specifically, like the one they went on beginning February 1928.

 Their tool back then was the discount rate. You can see the data here: historical discount rate. They started the campaign when the economy was only beginning to recover from the 1926 crash. It was too soon. The markets rallied phenomenally during the campaign. The DJIA almost doubled, going from 197 to 381. However, this was the last rally. The end of the bull market. This is the scenario I’m looking for, today, to close-out the rally that began in August 1982.  

 Make no mistake: we are in extraordinary times, economically, for millions of Americans. For them and many of us it’s only going to get worse. Although the DJIA may climb and the economy may recover, it’ll be different than anything most people have known in their lifetime. How the economy looks five years from now will shock most people. There is no bail-out this time, folks. Many of us have ‘seen the highs’ for our lifetime.

 I’ve learned so much since I wrote Winter is Coming. I’ve read so much in these last 5-years. One thing holds steadfast though and that is, as long as we live under a central banking system, crashes are inevitable. There’s no such thing as ‘it’s different this time’. That’s because we have been living under a central banking system since America,  started. I encourage you to watch the movie, The Money Masters, if you want to cut through all the crap. It’s long. It’s worth it.

 Hopefully, I’ve gotten my message about the economy across, within my writing over the last six-years. In the beginning that message was that we wouldn’t crash until late 2009. I’ve since updated that to be late 2010. I’m sticking with it in this update. The one basic reason? The fed is adding liquidity, they aren’t draining. Same can be said for the ECB, for now. However, like Trichet says, “I’m going to be closely monitoring the situation.”  

 If I were you though, I’d stop myself out if the DJIA gets to 9500. It shouldn’t cross below 10k. If it doesn’t the game is on. So, stop yourself out at 9500, worst case scenario. If we rally instead, I’ll be looking to get out as we approach a new all time high. I’ll use the timing of the 1928-29 rate hikes to get out, regardless of where we are. Meaning whether or not we hit that all time high and are still above 10k.  

 The 3-year warning I wrote about above is simply this: the August 2007 subprime crash was the 3-year warning. Just as the 1926 Florida Real Estate crash was. The market is giving you a warning that all is not well and we are about to change financial eras. We are moving from Fall (3^rd Turning) to Winter. (4^th Turning).

 Lastly, one of my favorite new web sites is Dr Housing Bubble. Read his growing series on the housing bubble. It’s simply awesome.

 As always, feel free to email me any questions.

 Take care, Jim

 

03/13/2008

 It's been 3-months since I last updated this section. The worrying amongst traders is astronomical. They are stating that we will be ending the world quite quickly, in 2008, as far as the economy goes. I'll be brief, in my statement today.

When the Fed chooses to collapse the economy, they will do so by draining liquidity precisely when you least expect it. This would be one of those times. Guess what? They're adding liquidity, not draining. This is not the crash. NOT YET. I'm buying the stock indexes every month, as I have been since May 2004.

Currently, I'm still bullish.

Take care,

Jim   

12/12/2007

 ZZZZZZ. Nothing to report. Everything moving along as expected. As I wrote below, on 08/10/2007, I'm still looking for oportunities to buy the Dow Index. No...the housing thing doesn't spook me. NOT YET. It's not time. I'm still long the Dow Index and will stay long. We still have about 3-years before the crash. But between now and then, stocks will rally, like I have been writing, below.

09/18/2007

In support of my contention that we are reliving the 1920s, economically, and this year (2007) is similar to 1926, I post these statistics from the WSJ. Remember, I was looking for a Florida Real Estate Crash similar to 1926. I stated in my 6/27/2007 posting that we got it in the form of the subprime credit crunch that began in August of 2007.

Sources: RealtyTrac and the WSJ (Kevin Kingsbury at kevin.kingsbury@dowjones.com ). "...in August, there was one foreclosure filing for every 510 U.S. households." "In Florida, filings soared 77% from July to 33,932, resulting in a rate of one for every 243 households."

08/10/2007

 The recent credit market implosion is nothing to be worried about as far as my forecast is concerned. Everything is still in place for a huge Dow Jones Industrial Average (The Dow) rally over the next three years.  

I repeat what I’ve been saying since 2002:

• Look for buying opportunities to get long (buy) the Dow Index.

• We are repeating the 1920s at the moment. Consider 2007 like 1926.

• The housing market is really 2 housing markets. The homes that were over 750k in 2002 (when I wrote my housing study which can be found below) and the homes below that figure. The homes over that level saw their highs in January 2006. The homes below that figure are in a mild correction and They will rally back…to their old highs and just above those highs.

 

• The world is not ending. Not yet anyways.

 

• All news services will continue to report the dooms day scenario…yet the Dow will rally. All the way into 2010. Then the real crisis will come exactly when you don’t expect it.

 I’ll post more at a later date. For now I could care less if the Dow falls below 12,500 or 12k because I know that it will hold.

 Thank you

Jim Goulding

jgoulding@ghco.com

 

    06/27/2007

    There are catalysts to a crash. They happen over the course of 3 years. Then there's the spark. The spark is the final piece to the puzzle. I've taken both terms, catalyst & spark, from the work of Strauss and Howe.

    For the financial crash I've predicted for late 2009 or late 2010, one of the catalysts has beed triggered. The first one.

    What's unbelievable to people is a continued rise in the Dow Jones Industrial Average (DJIA) while these catalyssts are being activated. Yet the DJIA will continue to rally, as I've predicted, to 35k before the crash.

    The first catalyst was the collapse in the Sub-prime mortgage market. Understand that I believe we are repeating a cycle. As one of my other predictions proved, we are repeating a cycle. The stock market prediction is based on the same theory as the CBOT prediction. As the catalysts are triggered, for the stock market prediction, the cycle proves itself. If the cycle continues to prove itself then we are headed for a big rally in stocks, followed by a big crash.

    The first catalyst in the last financial cycle (that we are repeating now) was the Florida real-estate crash of 1926.

   

To: All
From: Jim
Date: 23-Jan-2007:1:44:PM pst
Subject:  Stock Market Update
Message:
Stock Market Update
Tuesday, January 23, 2007
8:56 am

Last time I wrote about the stock market we had moved over 11,000. I
said to buy, stay in, don’t get out until I tell you that I’m no longer
confident in the market. Before that post, in July 2004, we were trading
10,000. I said the same thing. Get in; don’t get out until I let you
know I’m no longer confident. Specifically, I was speaking about buying
an index fund that mimicked the Dow Jones Industrial Average. Recently
we hit all time highs and thought it was a good time for an update.

New all time was 12,613. As I write this, we’re trading 12,500.

Nothing’s changed. I’m still confident. We’ll fluctuate below 12,000 and
above 13,000 over the first half of the year. I’m looking for a 22%
increase for the Dow this year.

We opened the first trading day of the year at 12,466. A 22% increase
would put us at 15,208, in December 2007.

If my confidence in the market changes, I will let you know. My best
guess is that we are still 2-3 years away from my confidence changing.

I have a set of indicators that will tell me when the 'end' is near.
None of those indicators are remotely close to being triggered.

Take care,
Jim

To: All
From: Jim
Date: 23-Oct-2006:1:33:PM pst
Subject:  DOW
Message:

All, The DOW: Last posting about the DOW was when it crossed 11k. I
loved the market and told everyone to stay long. That means you own a
basket of the DOW stocks, called a DOW Index FUND. Owning an S&P index
fund is fine too. Nasdaq also.

In fact I wrote, some time back, that I'd split it up 60,20,20 between
the indexes. Or, something very close to that figure. Now the DOW has
crossed and closed above 12k on the weekly charts. I thought I'd offer
an update to what I see in the market(s).

I don't see anything that has changed. Stay long. And, remember, this is
the time to own big cap stocks. Big U.S. international companies. The
best way to own those stocks are through an index fund that make up the
big three stock indexes, The DOW, S&P, and NASDAQ.

Take care, Jim
 

 

To: All
From: Jim
Date: 14-Feb-2006:4:23:PM pst
Subject:  DOW update
Message:
Update on the DOW

Print this and read it sometime.

In May of 2004 I wrote that the rally in the DOW was beginning. The DOW
was at 10,000 when I posted that message.

Today we closed over 11,000 for the second time in 2 months. The last
time we failed very quickly down to 10,600. This time it's for real.

Will we get below 11,000 again? Of course but it will be brief.

There are loads of money managers sitting on the sidelines with loads of
cash, and at 11,300 they'll be in deep doo-doo because they'll be
missing the rally. That's when they'll have to get in the market. They
have no choice because their performance is gauged on their portfolio
returning as much as the DOW and the S&P 500. We'll see 12k pretty
quickly when that happens.

I'm still extremely bullish. We are in an era where no one can believe
the market is where it is and they will continue to doubt it all the way
up. It happens again and again in this country. Yet, no one sees it
because they can't get out of the way of their own opinion.

Fact: the big name companies are laying-off everyone, which makes their
profits soar. They are outsourcing everything else. They will sacrifice
long-term stability for short-term gains. That all adds up to higher
stock prices for the select few companies that makes up the Dow Jones
Industrial Average. Remember, there are 30 DOW stocks that make up that
average, there are 15,000 others that will not fair well, if at all.

The rich get richer in this era…that holds true for big name companies
also.

Strauss and Howe wrote the following, in 1997: “The big hand on the
atomic scientists’ “Doomsday Clock,” which hit three minutes to midnight
in 1984, has since retreated. Yet Americans are more pessimistic than
ever.  They are inclined to believe that any good news (like a roaring
stock market) comes with a sinister edge (big layoffs) for which a price
will someday be paid.”

Strauss and Howe go on to say that this mood will continue into the
middle oh-ohs.

I do a lot of research on volatility. My research showed volatility
declining from 2003 to early 2006. Volatility bottomed in August 2005. I
was only off by a few months. We will get volatile from this point all
the way into late 2009. Except shock and awe news that moves the market
in big swings. That should begin late this year and increase more and
more in ’07.

Fact: The housing study I did in 2002 (and is still on my web site)
showed houses under 500k doing fine until 2012 (those homes would now be
under 750k since they increased in price since 2002. (I should say that
the housing study on my site costs $2. Don’t buy it, I’ll send it to you.)

… BUT not houses over 500k (now over 750k). I said buyers would peak in
Jan 2003 and it would take three-years for that market to calm
down…then…be prepared for a slow, gradual decline of that sector into
2009. Not a panic, and not a crash before then.

That’s exactly what has happened. The luxury homes have seen their highs
and will not see those highs again in our lifetime. Yes there’ll be an
occasional big sale home here and there, but they will be few and far in
between.

All these studies are based on the same thing….generational theory. Even
my seat price analysis. Which…by the way….uh em…the Senior Economist
from the Federal Reserve Bank of New York contacted me to congratulate
me on the study and asked for my data. (Showing off now over).

If I change my opinion, I will let all of you know ASAP.

Ride the bull while you can because when I tell you to get out…get
out…it’s gonna be ugly. For the rest of our lives ugly. Then I’ll be
singing a new song…”All I want for Christmas is a bucket full of Euros
and a lot of Swiss Francs.”

jim

 

 

To: All
From: Jim
Date: 17-Oct-2004:10:22:AM pst
Subject:  The Stock Market
Message:
The Dow

Mom had asked me about my outlook for the DOW over the next couple of
years. I was getting ready to add a short-term outlook to my web page,
so I thought now is a good time to do just that.

The link above will take you to my Stock Market page and the new posting
called, 'Short-term outlook'. [note; this page never got up and running].

I'm still very bullish the market and my research shows that we are
going to rally. However, this research is from a macro point of view. I
wanted to bring that view into a smaller picture. I went back to the
data and did some analysis. The results are on the web page in words and
pictures.

The summary of my latest research states the following:
"In Early May, 2004 I thought we'd start the rally that would take us up
to new highs. Obviously that hasn't occurred. That's what sent me to do
more research and try and figure out why. This short-term outlook should
help identify when the old highs on the dow will be broken.
 
 "What was it that I found that brought me to this new conclusion? It
appears that we are about 13 months behind the historical era I think we
are repeating. These new projections move everything back 13 months,
which means we are going to hit DOW 35,000 in 2010, not 2009."

Hope this helps.

Take care,
Jim

 

 

To: All
From: Jim
Date: 29-Feb-2004:4:44:PM pst
Subject:  Dow 5k CBOT 1.3mm
Message:
Oh! They said I was out of my mind! (I am, but don't tell them)

In early 2002, I told them the Seat Prices on the CBOT were going to go
well over a million dollars. They laughed.

Their not laughing anymore!

In early 2002 I said the DOW was going to 35K. It was trading 8k. They
told me I was nuts!
Take care,
Jim

 

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 May 2007 - Below are two postings I made concerning the DOW (the DOW is the same thing as the DJIA).

 Generations and the Dow (August 2003)

I was asked this question and it’s a great question. Here’s the answer.

“Do you see 9/11 as a Catalyst? Or is it a Spark that doesn't catch, e.g. the Palmer Raids in the early 1920s? The market dropped and people freaked - but later went on into one monster blow off. As you know, we are a few years early for the S&H Winter to hit full-force - they typically quote 2005-2013."

I do think that 9/11 was much like the palmer raids and could easily be labeled a spark that didn't catch. I basically think that a catalyst and a spark that doesn't catch are very similar. Whatever 9/11 is going to be categorized as, I would say that the major impact it had is that the Millennial generation stopped being born shortly after 9/11. The new Artist generation, which I label the 9/11 babies, began being born shortly after.

The largest piece of evidence I can offer for this is the study that was done on the women in and around lower Manhattan that stated the babies they had, that were conceived after 9/11, are smaller in weight compared to another sample they used with babies born prior to 9/11. They think it's because of the debris in the air. Maybe. They don't know.

Furthermore, the shift in the American psyche was tectonic. This split is usually initiated at the beginning of a Winter crisis. It seems to have manifested itself about six-months after 9/11. This was due to the information that circulated on the Internet concerning every 9/11 theory, whether or not any of it is misinformation or not, it did the job of dividing the country about the government, and IRAQ solidified the division.

As far as the market drop and the comeback of the market, I'd just like to pass along the following information. I stand in the Ten-Year Treasury-Note pit in the Chicago Board of Trade. The name of the room I trade in is the Financial Room. We trade the commodities that represent most of our national debt. When the gov., sells debt, the buyers of that debt have to hedge somewhere. They hedge with us.

This room is the center of the universe as far as our national debt is concerned and it will become increasingly more visible as the crisis approaches. (If you’ve ever seen CNBC during the day, they cut to the CBOT floor with a reporter named, Rick Santelli. Behind Rick, you can see a trading floor; that’s the Financial Floor of the CBOT.)

The point is this; the market (the DOW) is behaving like the market of the 20s. However, I noticed something recently. When I advance the chart of the twenties in time, by 14 months, the similarities of this latest rally we are having (August 2003) are startling. 9/11 may have escalated the pace of the impending Spark. (The Spark wasn’t expected until 2009) It may have advanced to 2007.

To explain the above paragraph further, line up the Dow adjusted for inflation, beginning at 9/17/2001 (when the market reopened after 9/11/2001) and line it up with 12/07/1924. It’s very similar. 12/07/24 was the beginning of the last leg of the rally that started in 1901, just like the modern day rally began in 1981. The market characteristics are very similar, and not just the actual numbers but also in society.

This theory will be confirmed if the DOW keeps advancing over the next few months. If the DOW breaks below 9000, this theory is shot. 

Remember, the rally from late 1924 up until the 1929 crash was huge. For many other reasons, like invention cycles and real estate cycles, we are mimicking the 1901-1929 cycle very closely. This all translates to a huge rally, before the crash. If the rally continues over the next few months and we break out to 10k-10.5k, we will head straight up to 18k over the next 20 months. We’ll peak at 35k sometime in mid to early 2008.

If the above theory fizzles, over the coming months, we’ll start the last leg of the rally in Nov 2004 and continue to 35k by mid 2008, with the break starting in Oct ‘09. 

The DOW will fall to 17k from Sep ‘09 through 2014. We may even head back to 10k. But that’s it. Then we begin a very slow rally over the course of the following 9 years.

 

 

UPDATE March 13th, 2006

I was going back over the article, above, today and thought it deserved an update. From March 2006's point of view, I'm still sticking to DOW 35k. Several things have changed as far as the Spark though. Since the DOW hasn't started the major ascent, that pushes the Spark back to the 2009 area.

There's a board I post on at urbansurvival.com and there's a particular posting here: http://urbansurvival.com/discus/messages/14/221.html?1090420627

That posting is my buy signal, in May 2004. Worst case scenario you were in at 10,200. I'm still very confident we will rally to 35k. My stop price is 8,200, in the DOW. If it hits that, I'm out and I'll re-think everything.

In the next week or so I'll be putting out a more detailed update about what I think the future holds but not much has changed as far as my DOW 35k prediction. We're still headed there.

Take care,

Jim

 

 

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    I was interviewed for Futures Magazine, January 2007 special issue The 2007 Economic Outlook.

    Here's the excerpts.

Excerpt #1                                            Excerpt #2

  Excerpt #3

 Here's the full story I sent Futures Magazine with my predictions for 2007, including a 22% rise in the DJIA.

    Download in pdf.

 

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   Generations

    Generational and Turnings theory are the main two indicators I use to predict on the macro level. Furthermore, Strauss and Howe have made many predictions within their books. Their latest, Millennials Go to College is key in understanding where we are going as a society.

 

 

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   Housing

 Below you'll find a summary update from the housing study I wrote. The summary can be found inside the housing study document. You may download the study by clicking the following link: Housing Study

Summary

What may be concluded from this study? [updated 11/2005]

People tend to purchase their 1st home at the age of 26 (start-up home). Then, at age 46, they trade up to a bigger size home (trade-up home). This study shows how many people there are to purchase homes at those specific ages and sorts that data year- by-year from 1977-2043 The numbers clearly show that as the pool of buyers grow, so does the price of housing. We could expect the flip side of that, as the number of people in the pool decreases. 

 

The number of people in the trade-up home category peaked in 2002, came back-up a bit into 2004 and slowly declines into 2007. After that, there's a steep drop off. I consider the trade-up home category to include more expensive homes, since a 46 year old can afford a more expensive home. The conclusion for the 46 year old age group is that the more expensive homes peaked in 2002-03 and began a slow decline in price that will not bottom-out until 2016. Furthermore it won't surpass the 2002 peak in most of our lifetimes. The other group of buyers, the start-up homes, faired better. It bottomed in 1999 and has begun a slow climb all the way to 2016 where it peaks.

 

That makes sense considering those people will then be in their trade-up home phase. Therefore, the bottom of the trade up home phase should coincide with the top of the start-up home phase. The crash, people have been expecting hasn't manifested and this study shows why. There are too many buyers. Add that to the 'easy money' since 9/11 and you get a rise in prices. The upper bracket homes have peaked, but there are still plenty of buyers out there and they will bid on those homes as they slowly come-off in price. The start-up home category still has a ways to go. That's why we've seen such a clear rise in prices at the lower end of the market. 

 

So, what will cause the housing market to come down? 

There's several factors, other than the 'buyers pools', that are driving the housing market and they must be 

discussed. 1st, there's the inheritance factor. Meaning, the Silent Generation (b1925-1942) are the richest 

generation in US history and they are passing money down to the Boomers and Xers. Furthermore, they are doing so at lower tax rates, since the Bush administration passed the Estate-Tax laws in 2001. Estate-Tax rates are going lower and lower each year. Those lower tax rates are going to be reset in 2011 to higher tax rates. This type of scenario, the lower tax rates, can be defined as 'easy money'. Or, 'easy credit'. That will change and when it does, it'll squeeze the market. The target year, therefore, is 2011. (See tables below, CRS-28 and the 'Maximum Tax-Free Amount'.)

 

2nd, the inheritance being handed down by the Silent generation is helping drive prices, as I've written. This fact can be defined as 'easy money' also. However, in 2005, the Silent generation began passing away at a faster rate. If we kook at this point, strictly from an economic view, that's both good and bad. The good news is that the inheritance will come in large sums over the next 5 years, but the bad news is the resource (the Silent generation) is being depleted. As crass as it sounds, it's the truth. Remember I'm strictly speaking in economic terms. Not sentimental. 

 

There's one particular study, about inheritance being passed down, that attempts to show exactly how much will be passed down, and when. The study was written by Paul Schervish and John Havens at Boston College (BC) and can be viewed here: http://www.bc.edu/research/swri/features/wealth/. (See 'Exhibit A' in this spreadsheet, below, for a snapshot from the study.) BC's lower estimate is that 41 trillion dollars will be handed down from 1999-2052. They base the estimate on projecting the 1998 Estate-Tax filings, forward in time. 

 

That's great, but, what if the stock market crashes, or the dollar is devalued? I'm predicting that either scenario will take place after the Dow Jones Industrial Average (DJIA) hits 35,000. The 35k figure will happen sometime 2009-2012, then, it will dive to 17k within 18-months of its peak. Furthermore, it will trade under 10k, 5-years after the initial crash. That will be the bottom (2014-2017). We won't see the DJIA above 35k in our lifetime. The initial crash should trigger a default in the bond market, and the only solution will be to devalue or abandon the US Dollar. 

When that occurs, all the wealth in the US will be cut by a substantial percentage. Researchers can argue over the amount of money that's going to be handed down. Furthermore, they can argue about the exact net worth of households. But, that's not the point. The point is that when we have an economic crash, the size of inheritance and household net worth will be cut by a huge amount and that fact changes all the numbers in any studies' projections. 

 

The cause the  Great Depression wasn't the stock market crash. That was a catalyst. The cause was the inability of people to pay their mortgages and other debts. That's why the banks started failing in December 1930. No one had the money to pay their debts. We were a debt society back then and we are again, today. 

 

My conclusion is that the housing market prices follow the pool of buyers. However, if there is an economic crash, then, everything changes. Since I'm predicting that crash, then, everything will change. 

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 Below is a email sent George Ure at www.urbansurvival.com

 He later posted it in one of his articles.

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  CBOT Seat

 CBOT stands for the Chicago Board of Trade. In 2002, I completed a study of every Seat trade going back to 1899. I successfully predicted their rise from $300,000 to $3,900,000. You may read about the entire study at my CBOT Seat Analysis page.