Financial Astrology - Magi Astrology

BEAR MARKETS AND THE
DOT-COM CRASH

Nov. 1, 2000

One of the biggest stories in the financial world is the so-called Dot-Com crash. Of course this refers to the recent crash of Internet companies' stock prices. There are virtually no exceptions to the Dot-Com crash in that every Dot-Com company's stock has crashed. The best of the Dot-Coms came crashing down along with the worst. But this does not yet look like a bear market in Dot-Coms has set in; instead it looks like a dose of realism has moderated expectations for Dot-Com companies. From 1998 to the beginning of 2000, Investors bid up the prices of Dot-Com companies in a crazed frenzy that has not been seen since 1973, when Polaroid and Xerox led the way to a buying spree of technology stocks that ended during the bear market of 1974.

Will the Dot-Com crash ultimately result in a bear market? The answer to that question is complex.

A very great deal has been written about bear markets. A large amount has even been written about the astrology of bear markets. But as far as we know, very little has been written about combining astrology with the observation of worldwide events to help us predict an upcoming bear market. We will begin to deal with this in this link and will follow up with more about it in the future.

If you use the traditional definition of a bear market (a 20% drop in stock prices) we are already in a bear market because the NASDAQ composite has already had fallen 40%. But that is an absurd definition for a bear market. It would be like saying gas prices are cheap at $30.00 per gallon because the prices used to be $50.00 per gallon. The truth would be that gas prices are much too high at $30.00 per gallon and gas prices were absurdly high at $50.00 per gallon.

From an unemotional viewpoint, the NASDAQ composite and prices of NASDAQ stocks are still too high now. The Magi Society prefers to look at the recent drop as a "Reality Check" and we think this is healthy in the long run for the financial markets. As you might expect, the Magi Society takes a rather unique approach to the stock and bond markets. For one thing, we prefer the more classic definition of a bear market, which is when people are no longer interested in buying stocks and PE ratios are set in single digits. Hardly the case now. For another thing, in the past, bear markets in the US have had one common denominator that is not here now.

BEAR MARKETS IN THE UNITED STATES ARE PRECEDED BY WORLDWIDE UNCERTAINTY AND TURMOIL

Obviously, the Magi Society believes in the usefulness of financial astrology. Financial astrologers know that the stars have given us a sign before every bear market. Every bear market was preceded by an alignment of planets that would have predicted that a bear market could be coming. But the big problem has been that these astrological signs do not always lead to bear markets. The result is that astrologers have predicted the coming of many more bear markets than actually took place. Unfortunately, we at the Magi Society, and all astrologers in general, do not know everything we would like to know about financial astrology and the effect of the stars on the financial world. In our opinion, astrologers have also always needed a predictive tool that is not related to astrology to help us with our predictions. In other words, we need what we call a "Confirmation Tool" that helps us to know if the alignments of the planets are really as bad as they seem, or not nearly as bad as they appear to be. This is especially the case when it comes to trying to predict the US financial markets. The US financial markets are by far the strongest in the world and they are very highly resistant to bear markets. It takes a truly extraordinarily bad set of planetary alignments to send the US markets into a tailspin. For this reason, it is all the more necessary to have a confirmation tool (not based on astrology) to help us predict the US markets. At the Magi Society, we have several confirmation tools and we will discuss one of them in this link.

At the Magi Society, we look for economic or political confirmation that bad astrological alignments are as bad as they could be. Our theory is simple: if an alignment of the planets are really bad enough to be a sign of an imminent bear market in the US, then there must be confirmation of this in ways we can easily observe. For example, before the Great Depression hit the US and before our stock market crashed in October of 1929, there was ample evidence that something really horrific could happen because Europe had been in a depression for several years before 1929. Remember those old film clips about people in Europe pushing wheelbarrows full of money because inflation was so high? That was how bad it was in Europe.

It was during the crash of 1987 that the Magi Society first noticed that worldwide turmoil preceded every US bear market of this century. Few people remember this, but for the two months before the October 19, 1987 stock market crash, the world was in perilous times because Iran had mined the Persian Gulf and the shipment of oil had been severely curtailed. The US sent naval warships to sweep away the mines. On the morning of October 19, the European stock markets had already crashed because the US bombed an Iranian oilrig. These were all signs of political and economic turmoil that confirmed there could be a crash in the US financial markets.

There were also very obvious signs of turmoil before the 1974 bear market. There had just been a war between Israel and its Arab neighbors, and this resulted in all the Arab nations lining up against the US. Because of the unflinching support for Israel by the United States, the Arab members of OPEC forced OPEC to approve an Oil Embargo against the US and this was the catalyst that led to the 1974 bear market. Remember the long gas lines in that year? And sky rocketing inflation? All were confirmation signs of a bear market.

In 1990, it was of course the Iraqi invasion of Kuwait that was a very direct confirmation that a crash was coming during the second half of that year.

Even short-lived "bear markets" in the US had political and economic confirmations that the alignments of the stars were really bad enough to cause a significant problem in the US stock markets. For example, before the August 1998 stock market mini-crash, there were clear signs of currency problems all over the world. The currencies and stock markets of the weakest Southeast Asian and South American countries crashed well ahead of the US mini-crash at the end of August. There were also rampant rumors that Russia would default on its sovereign debt, which it did.

By the way, the currency markets are very reliable signs of economic turmoil. The US dollar was in a bear market versus the Yen before the 1987 crash, and the US dollar was in a general bear market versus most currencies before the 1974 bear market. (It pays to watch the currency markets.)

So the next time you hear someone say that the alignments of the planets are horrific, and the end of the world is coming to the US financial markets, you should look around and see if there are any confirming signs of such doom. Chances are very good that if there aren't any confirming signs of significant turmoil around the world, the US markets will not be in for a really rough ride before it gets past the alignments of the stars.

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