The markets are rigged

[The Sceptical Chymist]

Adjusting the chart for inflation would only lower the slope of the linear trend. My point is not the % gain (the slope). It's about it being linear!

Did you look at the article I linked to and see the chart of the inflation-adjusted DJIA?  From 1916-1994, the market was NOT linear.  After the internet boom, the DJIA shot up to the moon, but it still doesn't look linear to me.  I am no mathematician, but I think you'd have to do a linear regression on the data and see what the r² value is with the best-fit straight line is (it's been a long time since I've done that) to see exactly how linear the market behaved.

In addition, I mentioned that the components of the Dow get changed and that also affects things.  Poorly-performing companies get dumped from it, good ones get added.  I'm not sure how a broader index, i.e., one with way more than 30 stocks, would look as far as your hypothesis goes, but I'd be curious and I think it'd be a better test.

Also, you're saying that the slope of the index (price vs. time) is the % gain.  That doesn't seem right simply from a unit analysis [slope = d(price)/d(time)], whereas % gain is p₂/(p₂-p₁)*100 .  You'd have to do linear regression to get a curve and then take the derivative of that--and the result isn't the percentage gain.  Maybe someone with a stronger background in math could give some input here.

[1713514879]

1713514879

[jjjfff]

]Did you look at the article I linked to and see the chart of the inflation-adjusted DJIA?  From 1916-1994, the market was NOT linear.  

I did look. Here is the chart from that article:



And here's the amount of money the FED printed :



Do these look similar to you?

Neither chart is linear, but the relation of debt to market valuation is linear.

The FED prints money, the markets move up.

Why isn't 1916 to 1970 like the period after it? Because during that first period the FED wasn't allowed to freely print money.

Note how things moved more smoothly before 1970!!!

Because before 1970 their ponzi scheme was not running yet.

In addition, I mentioned that the components of the Dow get changed and that also affects things.  Poorly-performing companies get dumped from it, good ones get added.  I'm not sure how a broader index, i.e., one with way more than 30 stocks, would look as far as your hypothesis goes, but I'd be curious and I think it'd be a better test.

That's not how the Dow works. They don't kick out poorly performing companies due to PRICE, they substitute LOW VOLUME companies.

If GE stocks move 200 billion a day and crash 90%, GE would still be listed.

The Dow represents the stocks that matter the most (in the opinion of the Dow Jones methodology), not the best performing ones. The intention of this index is precisely to show how the American industrial output is doing on the market.

Also, you're saying that the slope of the index (price vs. time) is the % gain.  That doesn't seem right simply from a unit analysis [slope = d(price)/d(time)], whereas % gain is p₂/(p₂-p₁)*100 .  You'd have to do linear regression to get a curve and then take the derivative of that--and the result isn't the percentage gain.  Maybe someone with a stronger background in math could give some input here.

You're overcomplicating things.

My point about the slope is that you mentioned the inflation adjusted chart.

Note that the chart you posted goes back before the time when the FED could freely print money so you clearly have two periods there: from early 1900's when there was real capitalism and then after 1970 when the FED started controlling the markets by freely printing money for their banking pals.

[The Sceptical Chymist]

You're overcomplicating things.

I don't think I am.  This thread is interesting enough such that I'd like to hear what some math geeks think about it, and I've created a thread trying to get them here to scrutinize what you and I have written.  No responses yet, but that's about what I expected for a self-moderated thread in a spam-heavy section like Economics, even if I'm tempting people with merits for intelligent responses. 

I told you I agree with you about the inflation after the dollar was taken off the gold standard and I don't argue that the Fed is printing money like mad.  My contention is that the Federal Reserve is not "rigging" the stock market exclusively by doing that.  That's why I wanted to see the inflation-adjusted data.  That's why I want to see if the linearity you're talking about is mathematically sound (and relevant) and I don't trust my own judgement on that.  I want to hear from some people who know math and economics.

And again, if the market is "rigged", it seems that everyone should be able to take advantage of that by buying index funds.

[jjjfff]

And again, if the market is "rigged", it seems that everyone should be able to take advantage of that by buying index funds.

That's the catch. It's out of reach for you.

You don't have access to this bonanza because you're not a beneficiary of the nearly free printed money.

The big banks receive the cheap loans from the FED, those are the only people who can benefit from this system.

These folks:

https://www.forbes.com/sites/steveschaefer/2014/12/03/five-biggest-banks-trillion-jpmorgan-citi-bankamerica/#7c11354bb539

Or these:

https://www.theguardian.com/inequality/2017/nov/14/worlds-richest-wealth-credit-suisse

If the cheap FED money were available for everyone to benefit from, you'd get price inflation. The secret to all this is to keep all that money out of our reach.

[The Sceptical Chymist]

That's the catch. It's out of reach for you.
<snip>
If the cheap FED money were available for everyone to benefit from, you'd get price inflation. The secret to all this is to keep all that money out of our reach.

How would making a huge profit be out of reach for me if I bought an index fund in 1989, which is where your "linear" graph begins?  You're saying that the Fed's money is benefiting the stock market, correct?  If that's the case, then everyone with any money to invest (including 401(k) participants) can also benefit.  And in your second sentence above, you seem to be implying that there's no inflation--and that's demonstrably false.  The price of everything is higher now than when I was a kid, and so are the wages people are being paid. 

I'm going to hold off on posting anything else until I lure someone smarter than me here to look at what we're both saying.

[jjjfff]

How would making a huge profit be out of reach for me if I bought an index fund in 1989, which is where your "linear" graph begins?

Because your money source and theirs are different.

When the resources finally reach you so you can invest them, you've worked for it and so on. By that time they've already bought the markets cheaply.

You make a few hundred percent in a lifetime of disciplined investing. They make a few hundred percent in a year (or much less, in some cases even overnight).

I'm going to hold off on posting anything else until I lure someone smarter than me here to look at what we're both saying.

This is what I picture you doing right now: "Ahoy there Cotton Eye Joe come over here take a look at this foreigner, sayin our good ol FED's all rigged up. You gotta problem boy?"

[carodupuis]

Sorry to say this, but your points are not proving anything. And by the way how do you know that the US is printing money all the time to artificially pump the market or however you’re putting it? You think any country can just print money like that? You really have a long way to go. You don’t just print money, cause printing money makes inflation worse. You need to read about it, and I also disagree with you.

[dentolas]

I agree that no one knows the "who" and the "how" and this can be debated almost endlessly. I am no economy or market expert but there is definitely one fact that arises ... the common people are the dogs that keep running after the bone without ever catching more than the smell...
Some people have the printers and the others have to use what they print...so ... seems to me fairly easy to conclude to whom the "economy" is working for ...

[jjjfff]

Sorry to say this, but your points are not proving anything.

Maybe you should provide some logical/factual/data-based arguments instead of just blanket dismissing everything I posted?

And by the way how do you know that the US is printing money all the time to artificially pump the market or however you’re putting it?

It's not me "putting it", it's real and it is called Quantitative Easing.

https://money.cnn.com/2018/07/31/investing/stocks-market-federal-reserve-qe/index.html

https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

You don’t just print money, cause printing money makes inflation worse.

Yes the FED does "print money".

You need to read about it, and I also disagree with you.

Hmm ok.

[realr0ach]

My reply from another thread below.  The original poster of this thread sounds like some sort of govt shill trying to trick people into propping up the stock markets and prevent them from profiting from the commodity super cycle in things like silver and gold:

^I just started looking at it and all I can say is that jjjfff red line on the chart is the most arbitrary, meaningless line I've ever seen.  About the same or worse than most arbitrary, meaningless lines shitcoiners use in these threads.  There's no type of trend or anything there.  The real line would probably be more like the purple one I drew below, but his goal was to make stocks look better than they are.  

It doesn't matter how much money the govt prints, there are other markets besides the stock market for the money to go into.  Nobody buys overpriced assets no matter how much money you print.  Right now commodities are cheaper compared to all other assets than they've been in like decades, so that's where the money will go.

[cellard]

Governments obviously print money, there is too much at stake, the entire empire is at stake actually. So it's on their incentive to do anything as possible to keep the empire running, and that means more QE rounds to keep the market from crashing.

Roach as always makes some valid points but also as always, misses the point of Bitcoin and goes all in on metals instead of allocating some of your portfolio in Bitcoin to benefit from its unique features. What can I say? at this point it looks like he will never buy back again. Not a good idea to not own Bitcoin for the long term as well as some gold but that's not my problem.

[realr0ach]

Roach as always makes some valid points but also as always, misses the point of Bitcoin and goes all in on metals instead of allocating some of your portfolio in Bitcoin

I  would buy shitcoins again if there was a single one where transaction validators aren't designed to centralize, but there's not.  If transaction validators are designed to centralize, they have no fundamentals, and who the fuck buys something with no fundamentals? 

The only current fundamentals of shitcoins are regulatory arbitrage, but since transaction validators centralize, the govt can completely control them with ease and there will be no regulatory arbitrage.  Who the hell wants to willingly use a non-fungible token in a centralized system regulated and controlled by the govt?  That is the cashless society slavery system people like Aaron Russo talked about:

https://www.youtube.com/watch?v=LGcatieMvfk

Shitcoins have built-in middlemen, are designed to centralize, and don't remove counterparty risk.  They have no fundamentals compared to physical metals.

[d_eddie]

Yeah, and I'd also like to read a response from OP (or anyone) to the post I made in this thread pointing out that the chart is not inflation-adjusted

Adjusting the chart for inflation would only lower the slope of the linear trend. My point is not the % gain (the slope). It's about it being linear!

If you draw a linear X-Y relationship (normally, a straight line) on a log scale (which adjusting for inflation would entail), you don't get another straight line with a lower slope. You get a, well, logarithmic curve, which "bends down" while going to infinity. Therefore, your red line wouldn't be a line, unless you pick your anchors differently, continuously changing them to keep fitting as the data go along.

[The Sceptical Chymist]

Adjusting the chart for inflation would only lower the slope of the linear trend. My point is not the % gain (the slope). It's about it being linear!

If you draw a linear X-Y relationship (normally, a straight line) on a log scale (which adjusting for inflation would entail), you don't get another straight line with a lower slope.

Plotting the DJIA data on a logarithmic scale doesn't adjust the data for inflation--is that what you're saying?  And jjjfff isn't saying that a log scale plot would just lower the slope of a straight line; he's saying inflation-adjusted numbers would, and I'm pretty sure both of you are wrong here.  

This is exactly what I'm looking for help with.

Just found this site, and it's pretty obvious you can adjust the DJIA chart for inflation on both a linear and logarithmic scale.  I know it's done using the CPI data, but I don't know how that's done mathematically.

[YOSHIE]

It takes a long time to determine the market that is really good and positive, maybe this one factor of bitcoin has plummeted now, nowadays there are many markets in the wild that are irresponsible, such as markets that should be suspected, and all need to be vigilant and careful in accessing forBitcoin investment.

[d_eddie]

Adjusting the chart for inflation would only lower the slope of the linear trend. My point is not the % gain (the slope). It's about it being linear!

If you draw a linear X-Y relationship (normally, a straight line) on a log scale (which adjusting for inflation would entail), you don't get another straight line with a lower slope.

Plotting the DJIA data on a logarithmic scale doesn't adjust the data for inflation--is that what you're saying?  And jjjfff isn't saying that a log scale plot would just lower the slope of a straight line; he's saying inflation-adjusted numbers would, and I'm pretty sure both of you are wrong here.  

This is exactly what I'm looking for help with.

Just found this site, and it's pretty obvious you can adjust the DJIA chart for inflation on both a linear and logarithmic scale.  I know it's done using the CPI data, but I don't know how that's done mathematically.

I'm implying adjusting for inflation is basically the same as using a log scale - if inflation is more or less constant or centered around an average. And I'm suggesting you don't get a straight line if you do adjust.

And, I add, anyone wanting a straight red line at the end of an arbitrary curve can simply draw it by joining whichever two endpoints they choose.

The bottom line would be: the graph as posted by the OP is more or less pointless.

[Reid]

It is a claim that is difficult to be proven.
Why? They are the only ones who knew what is going in there. We just have the graphs and riding ths boat.

What can we do about this? I think that is one of the question which is also difficult to answer.

We can stop using banks. I already did.
But who can get away from using cash? None.

It is the government and the banks who controls the financial market. You cannot do anything about it.
You could shout all you want but it will not stop. This is happening for decades or maybe centuries.

[Indamuck]

This is why most people recommend buying and holding.  Normal investors don't have the ability to swing trade and try to time the market.  They are at such a disadvantage going against big firms and whales that actually control the market.  You can be sure that over the long run the market will rise so the safe move is to just buy and wait, don't try to be a pro trader constantly making moves.

[Wellyan]

It takes a long time to determine the market that is really good and positive, maybe this one factor of bitcoin has plummeted now, nowadays there are many markets in the wild that are irresponsible, such as markets that should be suspected, and all need to be vigilant and careful in accessing forBitcoin investment.

yes, this is the problem that makes investors back away, because the increasingly old market is increasingly fraudulent. then the investors need to be aware of this. because this event also makes investors and all of us feel things that we never expected.

[SnapDown22]

I agree that no one knows the "who" and the "how" and this can be debated almost endlessly. I am no economy or market expert but there is definitely one fact that arises ... the common people are the dogs that keep running after the bone without ever catching more than the smell...
Some people have the printers and the others have to use what they print...so ... seems to me fairly easy to conclude to whom the "economy" is working for ...

in my opinion the market was rigged by hackers and mafia so the market price was broken and unstable again maybe because of that in my opinion and I think that was the culprit