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Astrology and the markets: Pure nonsense?

Andromeda, again. by makelessnoiseWhere do I turn next? The experts don't seem to have a clue about our economy and where it is headed. Well then, let's look at the stars.

If you've never heard of such a thing, it sounds pretty crazy. But there is actually a community of investors out there that believes that reading the stars is the key to profiting in the stock market.

I'm not one of them, but it's fun to tap into their insights every now and then. Here is the latest:

The planet Pluto moved into Capricorn this past fall just in time for Freddie, Fannie and AIG to collapse. Capricorn is a sign of discipline. It is a disruptive force that is wreaking havoc from central banks to stock markets all over the world. Capricorn has the effect of looking at things objectively, without emotion and looking at reality the way it is -- not the way we want it to be.

For the past 15 years Pluto was moving through Sagittarius, a sign of expansion, growth, over extension, and over optimism. This could help to explain the way world economies grew helter skelter with the whole world getting over-extended and over-burdened with excessive debt. It was a "devil-may-care" attitude on the part of Wall Street and individuals as well. Now with the bursting of the bubble, the chickens have come home to roost.

Pluto will be going through the U.S. chart 8th house of mystery, death and rebirth. The last time this happened was in 1776!

Do you foresee big changes coming? Do you think the stars can help us decide how to invest?

They laughed at Peter Schiff ... but he was right!

Throughout 2006 and 2007, economist Peter Schiff went on every show that would have him on to warn the world about the real estate bubble, lax lending standards and artificially low interest rates.

And everyone argued with him: Ben Stein, Art Laffer and others called the subprime problem a "tiny problem" and said that it was a tremendous opportunity in the financials. Watch a "Peter Schiff's Greatest Hits" compilation below.

Sunday Funnies: Big Brown a sure thing at Belmont

The outcome of the Belmont Stakes where Big Brown came in last instead of first is just one more example of the difficulty one has in making predictions. I know little about horse racing, and the only thing I know about the Triple Crown is that there has not been a winner in 30 years (and counting). As irony would have it, the winner of the Belmont was the 38-to-1 long shot Da Tara that went wire to wire.

This event stands out in my mind because I am asked to predict future events on a regular basis (whether it makes sense or not), and because I am in the middle of reading The Black Swan about randomness and uncertainty by epistemologist Nassim Nicholas Taleb. I highly recommend the book to fellow investors and business leaders interested in getting some perspective on risk and the many fallacies we all overlook.

The number of variables that can affect a specific outcome like a horse race are significant, and in the case of the Belmont Stakes, on this occasion something was amiss. When Big Brown turned for home, something wasn't right. Jockey Kent Desormeaux knew the big bay colt was finished. Trainer Rick Dutrow Jr., who guaranteed racing's first Triple Crown in 30 years, knew it, too.

Continue reading Sunday Funnies: Big Brown a sure thing at Belmont

2007 will suck, all 12 months? So says DR Horton CEO

Were you watching CNBC after the market close today? If so, you may be cancelling your plans to sink all your home's equity into a big remodel. In an unusually frank and sober prediction, D.R. Horton, Inc. (NYSE:DHI) CEO Donald Tomnitz told the audience of millions of market watchers that "2007 is going to suck, all 12 months."

David Gaffen from the Wall Street Journal's MarketBeat blog was watching, and he wonders if it's not just a reaction to D.R. Horton's not-exactly-stellar stock performance. Though only down a penny today to $24.55, the stock is off 20% since its February 2, 2007 high near $31 -- a rough month, indeed.

The good news (sort of)? Tomnitz thinks 2008 will be better. Not good. Better than the suck-icious 2007, at least. Is this a case of let's-give- the-worst-case-projection-and-hope-no-one-blames-me-when-it- happens? Or is it really true? Either way, the homebuilder's stock isn't doing any better since his words; it's down over a percent in after-hours trading.

I, for one, won't bail out of the market but I think I'll wait to refinance... with this kind of talk, the only thing I see on the horizon is cheaper interest rates. And I'm certainly not going to hire Donald to run pep rallies anytime soon.

Symbol Lookup
IndexesChangePrice
DJIA-139.7410,324.66
NASDAQ-27.492,148.56
S&P 500-15.691,094.94

Last updated: November 27, 2009: 11:43 AM

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