Dark Art of Financial Astrology

By: Adam Hamilton | Fri, May 17, 2002
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In these troubling investing times through which we are all journeying in the wake of the supercycle bubble in US equities, many investors have grown disillusioned with mainstream investment advice.

And why not? We can all easily remember the incredible ubiquitous Wall Street bullishness as the NASDAQ exploded parabolically from around 1500 in October 1998 to over 5000 in March 2000. Unfortunately, the perpetual Wall Street zeal for selling stocks to investors at all costs, consequences be damned, continued unabated after the bubble burst and the worst bear market in US equities since the Great Depression began to unfold.

Even in these exceedingly tough markets, every single day investors are assaulted with a phenomenal array of psychological firepower explicitly designed to brainwash them into believing that stocks always go up, that right now is the perfect time to deploy capital in equities, and that no matter what happens in the world, good or bad, it must always be bullish for stocks. The extreme bullishness of Wall Street that served it so well in the 1990s has turned into one of the ultimate con games.

The English language is full of countless gems to reward those who diligently study it, like the derivation of the word "con", short for "con-men", "to be conned", is a contraction of the word "confidence". I don't think even the most virulent perma-bull would argue with the assertion that the financial media's and Wall Street's primary goal is to instill and nurture confidence in US investors, whether it is warranted or not at this peculiar moment in history. A mighty confidence game indeed!

But, sooner or later there inevitably comes a time when investors decide to think for themselves rather than being led around with ropes tied to rings in their noses like dumb cattle. If someone emphatically tries to convince you every day that the sky is truly red, but each time you look up your own eyes tell you it is really blue, after awhile the person spinning the red-sky yarn loses all credibility with you. Since Wall Street has been earnestly telling us for over two years now that the turnaround is right around the corner, that US stock prices are going to rise soon, that corporate earnings will explode "next quarter", these confidence men (con-men) are rapidly losing credibility with investors, and rightfully so.

To make matters even worse, now we are learning more and more about how rock-star-like celebrity Internet analysts were being paid millions a year in 1999 and 2000 to write glowingly-positive recommendations for vastly overvalued junk stocks that they secretly knew were nothing more than garbage. It is outright fraud to abuse a position of trust to intentionally mislead others. Wall Street analysts who were touting dangerous companies with no real businesses to the public while at the same time writing private e-mails to their buddies calling these very stocks "pieces of crap" ought to swing from the yardarm.

Destroying people's financial dreams by intentionally swindling them out of their retirement investments and kids' college funds has to be one of the vilest financial crimes imaginable.

With this sorry backdrop of rapidly fading investor confidence in mainstream Wall Street and financial-media opinion and analytical objectivity, it is not at all surprising that ever more investors are turning to alternative sources of opinion and analysis. When formerly quasi-trusted mainstream financial information feeds like CNBC continue to be all-bullish-all-the-time, even in the midst of a catastrophic supercycle bear market in equities, it is no wonder that their credibility is fading fast.

Ventures like my own, Zeal LLC, are capitalizing on this decentralizing trend away from monolithic Wall Street research and analytics to smaller independent sources of information. I believe that if my company can earn your trust through the worst bear markets since the Great Depression, perhaps you will help my partners and I grow Zeal into something special in the coming decades. While small companies and the folks running them are just as biased as big companies, at least the independent analytic houses live or die based solely on the quality of information they provide and their stewardship of their precious clients' trust.

The only financial incentive the small independent companies have is to be right and help investors make money. They don't have any investment banking divisions to cloud their judgment or lead them to compromise personal principles and integrity like the Wall Street monoliths.

These growing numbers of independent analysts and their companies have all kinds of worldviews, philosophies, financial tools, and investment outlooks. It is a wonderful blessing to see them thrive as I truly believe that investors are best served by digesting a myriad of different ideas from many different perspectives. If every investor out there had the exact same CNBC-type all-bullish-all-the-time opinion, the markets would not function efficiently and would be a pretty dull place.

Some of the increasingly popular independent financial analysts delve into the mystical realms to attempt to give their clients a trading edge. Lately I have been receiving a lot of letters from our own Zeal clients regarding the increasing interest in financial astrology. My clients continue to ask for my thoughts on using astrology as a tool to divine the future behavior of the markets.

This essay is simply my humble attempt to articulate my own opinions on the ancient art of astrology as applied to the financial realms. Up front in the interest of full disclosure I need to confess to you that I am not a fan of astrology if you don't want to bother reading this long essay. Thankfully I am blessed to live in America where I can say whatever I want, wise or wacky, and have no fear of persecution. I humbly submit my own thoughts on financial astrology to the marketplace of ideas, hopefully to spawn food-for-thought and constructive debates elsewhere.

I do have a good number of friends, some prominent, who practice financial astrology and this essay is certainly not an attack on them. I am discussing the art of astrology in general, not its individual practitioners, in this essay. I know and respect some financial astrologers who are outstanding traders and I also know other financial astrologers who lose money faster than NASDAQ bulls. Just as there are good and bad market fundamentalists and good and bad market technicians, there are successful and unsuccessful financial astrologers.

Like any other idea, in order to discuss astrology we must first define it.

My beloved copy of Noah Webster's massive 4" thick English dictionary gracing my desk claims astrology is "the study that assumes and attempts to interpret the influence of the heavenly bodies on human affairs". Interestingly in the Middle Ages, the word "astrology" was originally used to describe the hard science we today call "astronomy", "the science that deals with the material universe beyond the earth's atmosphere". It is very important not to mix these two terms up. Number-crunching scientists at NASA do astronomy, but mystics do astrology.

My own view of astrology is largely defined by my studies of world history, a lifelong personal learning passion I continue to pursue.

As I have studied human history over the years, it never ceases to amaze me how huge astrology truly was in ancient cultures all over the world. Almost anywhere on the planet we can find great ancient civilizations utterly obsessed with the movement of the planets through the heavens. The planets controlled and dominated virtually all aspects of secular and religious life for entire empires. The worship of the planets was believed to be so important for day-to-day life that countless innocents were sacrificed to appease the perceived appetites of the dark gods thought to control the celestial planetary wanderings.

Not every ancient culture worshipped the planets however. The ancient Israelis were forbidden by God to practice astrology under penalty of death. The Torah book that Christians call Deuteronomy in the Bible details this strong prohibition in chapters 17 and 18. Those Hebrews who worshipped the planets and heavenly bodies or used them to attempt to divine the future were to be taken outside the city by civil authorities and stoned to death. The strong Jewish condemnation against practicing astrology and divination was definitely the exception in ancient cultures though, not the rule.

The question that has often puzzled me is why most of the ancients even cared about the planets. I can understand them worshipping powerful forces they can see, like hurricanes or volcanoes for example, but the planets, while no doubt interesting to academics, seem so remote and irrelevant in the affairs of men. Even today in the amazing Space Age, I bet that barely one person in one hundred could go outside at night and quickly point out and name the planets visible to naked eyes from Earth.

Why were the ancients terrified of the planets? When was the last time you heard about a planetary catastrophe influencing human affairs in a major and unambiguous way? I was blessed to come across an exceedingly intriguing hypothesis about a decade ago that I believe offers potential answers to these questions and is quite relevant in a discussion on financial astrology.

I am deeply indebted to the famous Chuck Missler of Koinonia House (www.khouse.org) for pulling together all this widespread data and connecting the dots. Mr. Missler, a strong Christian, is a retired American businessman who now travels globally and shares his passion about the Bible with audiences worldwide. Missler is a US Naval Academy graduate and former Branch Chief of the US Department of Guided Missiles. His professional background is engineering-laden and highly technical. He has served on the Boards of Directors of 12 public companies and was the CEO of 6 of them in his decades-long executive career. In addition to his brilliant genius-level IQ, he has an unquenchable zeal for truth that is downright contagious. I have been fortunate enough to meet this incredibly impressive man in real-life several times now and he continues to fill me with awe.

The meat of this essay is derived from Chuck Missler's research for his publication called "Signs in the Heavens" originally published in 1991 where he talks about the zodiac and Mars in a Biblical context. He further discussed Mars in 1996's "The Mysteries of the Planet Mars". These broad-scoping ideas that Mr. Missler has brilliantly assembled are incredibly provocative and super-relevant to the art of astrology and its growing allure to many investors. Some background information is in order to introduce Missler's amazing hypothesis to explain the ancient obsession with astrology.

Interestingly, almost all ancient calendars worldwide assumed a 360-day year. Today, as we all learn in grade school, it takes the earth about 365 and a quarter days to complete a revolution around the sun. The ancients certainly weren't stupid (look at the exquisite engineering of the Great Pyramid in Egypt) and it is highly unlikely that completely independent civilizations across the globe were all wrong on the simple task of counting the days it took for the earth to revolve around the sun. In addition, this 360-day number permeates all aspects of ancient cultures, and is even handed down to us today as 360 degrees in a circle courtesy of the Babylonian Empire, the same folks who also happened to invent what is known around the world today as the zodiac.

Missler points out, and backs-up with a carefully-noted bibliography of sources, that all of a sudden beginning in 701 BC civilizations all over the world started lengthening their calendars, going from 360-day to 365+ day years. Why? The Babylonians, Egyptians, Hebrews, Greeks, Phoenicians, Chinese, Mayans, Hindus, Carthaginians, Etruscans, Teutons, and other cultures all mysteriously changed their calendars after 701 BC. Obviously these disparate civilizations span the globe and did not all suddenly trash their old calendars without good reason.

Adding to the mystery, Missler fast-forwards almost two-and-half millennia and discusses famous Irish political satirist Jonathan Swift (1667-1745), the author of the fictional "Gulliver's Travels". Swift was making fun of the state of English science in the third part of his "Gulliver's Travels" story, where sea captain Lemuel Gulliver journeys to the flying island of Laputa. In Chapter 19 of his book, Swift goes into phenomenal detail describing how the fictional Laputian scientists have far more knowledge than the real-life English society he was parodying. Here is a tantalizing quote discussing the superior Laputian scientific astronomy knowledge…

"They spend the greatest part of their lives in observing the celestial bodies, which they do by the assistance of glasses, far excelling ours in goodness. For, although their largest telescopes do not exceed three feet, they magnify much more than those of a hundred with us, and show the stars with greater clearness. This advantage has enabled them to extend their discoveries much further than our astronomers in Europe; for they have made a catalogue of ten thousand fixed stars, whereas the largest of ours do not contain above one third part of that number. They have likewise discovered two lesser stars, or satellites, which revolve about Mars; whereof the innermost is distant from the centre of the primary planet exactly three of his diameters, and the outermost, five; the former revolves in the space of ten hours, and the latter in twenty-one and a half; so that the squares of their periodical times are very near in the same proportion with the cubes of their distance from the centre of Mars; which evidently shows them to be governed by the same law of gravitation that influences the other heavenly bodies."

So what you wonder?

Swift published "Gulliver's Travels" in 1726 and detailed to an astounding degree of accuracy the size, revolutions, and orbits of the two moons of Mars. Swift was writing before telescopes and optics had advanced very far and no one in the scientific community believed Mars had any moons. Science did not officially "discover" the two moons of Mars until 1877, when celebrated American astronomer Asaph Hall spied the two moons of Mars using the brand-new powerful telescope of the US Naval Observatory in Washington DC. Hall's find astounded the world!

Mr. Hall's two discoveries were provocatively named "Phobos" and "Deimos", the Greek words for "Fear" (the root of our modern word "phobia") and "Panic". Interestingly Phobos is the darkest object in our solar system, only reflecting 3% of the sunlight that hits it, and is less than 8 miles in diameter. Deimos is also very dark and is only 4 miles in diameter. These exceedingly small and dark moons are absolutely impossible to discern from Earth without very advanced telescope optic technology.

Now it doesn't take a rocket scientist to realize that Irish satirist Jonathan Swift published fiction technically describing the two moons of Mars perfectly fully 151 years before science had optics powerful enough to discover their existence! The disturbing question is how did Jonathan Swift know there were moons of Mars?

As Missler points out, Swift probably didn't know. But Jonathan Swift was a voracious reader and chances are he came across some ancient source describing the two moons of Mars and was fascinated. Even though he didn't know the accounts were true, he incorporated the ancient incredibly precise technical descriptions of Mars' moons into his vivid fictional parody of Britain. We are very fortunate today that Swift did use these ancient references because they establish almost irrefutably that someone, somewhere in world history knew about the moons of Mars before science could discover them with advanced optical technology.

You still with me? Believe it or not we are still on the path to discussing financial astrology, so please hang in there!

Virtually all ancient cultures worldwide suddenly and inexplicably lengthened their calendars from 360-days to 365+ days after 701 BC. In addition, there is undisputable documented literary proof that apparently someone somewhere in history had been able to observe exactly how the moons of Mars work in incredible detail before Jonathan Swift wrote about them in 1726 and before Asaph Hall "discovered" them in 1877, 151 years later. Here is where it really starts getting interesting.

The ancients worshipped the planets, but especially Mars. The name the blood-red planet bears today is the name of the ancient Roman god of war, and the ancient Greeks called it Ares, after their god of war. It was also called Baal by the ancient Semitic peoples. The ancients deeply feared the Red Planet. We laugh today at the quaint notion of being scared of the planets, but the ancients were absolutely terrified of them. This strong cultural fear of Mars handed down through the ages was even so well known millennia later that Mars' two moons were christened with the Greek words for "Fear" and "Panic" even in 1877 when scientists first gained the technology to see them.

There is one fantastic hypothesis that explains all these facts and coincidences. It involves a theory of orbital resonance, of near pass-bys between Mars and Earth due to slightly different orbital mechanics in ancient times.

Recently a couple American scientists were able to plug detailed orbital data from precise NASA observations into NASA supercomputers and run the known Earth and Mars orbits back in time. Provocatively, the computer models calculated that Mars and Earth were once on resonant orbits, with Mars taking 720 days to revolve around the sun and Earth 360 days. This potential discovery in and of itself is extremely interesting as it helps shine some light on the millennia-old question of why the ancients all had 360-day calendars originally and why they all changed them after 701 BC.

The NASA work also showed that the calculated original 2:1 orbital resonance of Mars with Earth meant that there was a near pass-by between Earth and Mars once every 54 or 108 years, either a spring intersection of their overlapping elliptical orbits around late March or an autumn intersection of their orbits around late October. Each time Mars and Earth would have passed by in close proximity once in every 54 or 108 year cycle, there would be net energy transferred from one planet to the other due to gravitational interactions. Every energy transfer would gradually alter the respective orbits of the two planets around the sun. For reference, we are talking between 70,000 to 200,000 miles from Earth on a Mars near pass-by. Believe it or not, this is actually inside the current lunar orbit of about 240,000 miles!

The NASA supercomputer orbital model, amazingly enough, calculated that the last near pass-by of Earth and Mars occurred in, you guessed it, March 701 BC. At that final pass-by, enough planetary energy had been transferred over the preceding millennia of near pass-bys to push Earth and Mars into their present day orbits. Earth had a net energy gain and its solar year went from 360 days, as the ancients observed, to roughly 365 and a quarter days today. Mars had a net energy loss and its annual revolution around the sun dropped from 720 days to its current 687 days.

Even more provocative, in order to observe the small and dark moons of Mars with the naked eye from Earth, Mars' orbit would have had to travel within 100,000 miles or so of Earth! Jonathan Swift thought he was incorporating merely an ancient legend of Mars' tiny moons into his "Gulliver's Travels" tale, but perhaps he was really drawing from an ancient eyewitness account!

Many puzzling historical, scientific, and cultural mysteries fall into place if the Mars-Earth near pass-by hypothesis is indeed correct!

Obviously having Mars (4222 mile diameter), which is almost twice as large as Earth's moon (2160 mile diameter), within 70,000 miles of Earth (7926 mile diameter) well inside the lunar orbit would not be something one could miss. The consequences of such ancient near pass-bys of Earth and Mars would be catastrophic.

Just as the gravitational pull of the moon spawns Earth's ocean tides today, the gravitational pull of Mars, larger and closer, would be tremendous. Coastal regions worldwide would be inundated with 200-foot high tidal waves, scouring everything in their path. Even worse, there would actually be huge crustal tides directly underneath Mars' fly-by path above Earth. While the Earth's moon can move the Earth's crust a couple inches today, Mars would exert enough gravitational force to cause 85-foot high land tides, almost impossible to imagine in magnitude of raw devastation!

There would also be massive and lethal meteor showers as space debris caught in Mars' gravity well were scraped-off into the Earth's gravity well and fell into the Earth's atmosphere. Many meteors would become meteorites as they smashed into the ground at 30,000 miles per hour, creating untold havoc. Some meteors, the ones with ices trapped inside, probably cooked into bolides upon entering Earth's atmosphere and exploded in huge fiery explosions in the sky. What a sight to see!

The Earth's magnetic field could actually reverse in a near pass-by as it was buffeted by Mars' own magnetic field. Earth's axis could actually shift from the enormous gravitational turbulence, changing earth's precession and axial tilt which causes the length of our seasons today.

Now if you were an ancient, and one morning on a cycle of every 54 or 108 years blood-red Mars rises in the Earth's sky and is occasionally so close at 70,000 miles that it appears 50 times as large as the Earth's moon, don't you think you would respect and fear the planets? Me too! It is almost impossible to overestimate just how frightening and influential such near pass-by events would be in forming ancient popular culture and leading to their utter terror of the planets.

Interestingly, the provocative Mars-Earth orbital resonance pass-by theory also explains numerous other ancient mysteries.

The ancient Israelis talk about the "Long Day of Joshua", when a day was lengthened by God to allow the great Hebrew general Joshua to pursue and annihilate his enemies. The account is in Joshua 10 of the Christian Bible. Amazingly, the computer models indicate that one of these Mars-Earth near pass-bys occurred on October 25th, 1404 BC, with Mars passing over the North Pole of Earth, which would alter Earth's axial tilt. This change in precession triggered by Mars' gravity would cause the sun to appear to shine for 2-4 hours longer than a normal Earth day.

Joshua 10:12-14 says, "At that time Joshua spoke to the Lord in the day when the Lord gave the Amorites over to the sons of Israel, and he said in the sight of Israel, "Sun, stand still at Gibeon, and moon, in the Valley of Aijalon." And the sun stood still, and the moon stopped, until the nation took vengeance on their enemies. Is this not written in the Book of Jashar? The sun stopped in the midst of heaven and did not hurry to set for about a whole day. There has been no day like it before or since, when the Lord obeyed the voice of a man, for the Lord fought for Israel."  Joshua 10:11, the verse right before this passage, describes a massive meteorite shower smiting Israel's enemies.

Other ancient cultures including the Chinese have legendary accounts of a single Long Day in human history. Wild stuff eh?

Ever heard of a little town on the Tiber River called Rome that eventually grew into a mighty empire? Rome was founded by Romulus around 753 BC, just after a projected Mars-Earth near pass-by on October 25th, 756 BC. Was the famous city on seven hills founded 15 miles upstream rather than on the seacoast in anticipation of 200-foot high tidal waves every 108 years? Why are most of the ruins of ancient cities we are aware of inland and not on the coasts?

Catastrophic earth crustal tides caused by Mars may explain why many great ancient cities were completely destroyed and rebuilt on their own rubble more than a half-dozen times. Ancient weaponry like swords and shields certainly wasn't adequate enough to level an entire city like our nuclear toys of today could!

Now I don't know about you, but if I saw blood-red Mars rise in the sky one morning appearing 50 times as large as the moon, and I watched meteors pummel the earth, the earth's crust crack apart, family and friends killed, and great cities leveled, I think I too would have a huge respect and fear of the Red Planet!

Since I wasn't around in 1404 BC or even 701 BC I don't know if the Mars-Earth near pass-by hypothesis is indeed correct, but it certainly nicely solves all kinds of scientific, astronomic, and historical mysteries. You have to admit the whole theory is quite fascinating.

My important point of this whole long digression is that there may indeed have been many very good reasons to worship and fear the planets in ancient times. It is hard to discern a 54-year or 108-year cycle from within one human lifetime, so it is no surprise that great priests rose among the ancient cultures whose sole job was to observe the planets and attempt to divine when they would next visit Earth and wreak havoc. It is not surprising that fearful ancient peoples, with little scientific knowledge, would sacrifice their own to try and appease the restless gods that they believed controlled the planets.

While astrology may have been relevant in ancient times, I don't believe it is today.

Today one can mathematically prove that a fully-loaded Boeing 747 flying overhead at 30,000 feet exerts far more gravitational force on humans on Earth than any of the other planets. While gravity formed the foundation of ancient Mars-Earth interactions if these ideas presented above are indeed correct, today the gravitational interactions between Earth and the other planets are far beyond trivial. On an individual human level, the gravitational interaction between Adam Hamilton and Mars, regardless of how many pizzas and cattle I eat, is effectively zero.

If you think the Mars-Earth orbital resonance theory is pretty far-out, you ought to check out the wacky world of modern astrology, which utterly defies all logic!

All the major planets that the astrologers care about revolve around the sun on the same two-dimensional plane. If you extend this solar orbital plane out to the great circle edge of the visible universe in all 360 degrees a bunch of stars are intersected. The almost flat ring of stars intersected by this plane is known as the zodiac. The ancient Babylonians divided their zodiac invention into twelve 30-degree sections, one for each sign. Each of the twelve sections has a major constellation, the birth signs like Aries, and three minor constellations, known as decans, like Cassiopeia, Cetus, and Perseus. This makes a total of 48 arbitrary constellations the astrologers are interested in, but they only comprise a tiny fraction of the total visible starfield, comparable to a rubber-band wound around the equator of a basketball.

As the Earth revolves around the sun, as viewed from Earth the sun appears to travel around a known and predictable path through the celestial sky each year, the ecliptic. Every 10 days the sun passes through a decan of a given major sign (or "house") as viewed from Earth. Astrology, an invention of the ancient Babylonians, claims that knowing from their perspective on earth where the major planets and sun appear in relation to the zodiac band of stars on the great circle of the ecliptic influences the affairs of men.

This fanciful Babylonian construct begs all kinds of thorny questions however. Why do only the major planets visible with the naked eye count in astrology? If the planets really do affect the affairs of men shouldn't the outer planets only discovered in the last four hundred years be relevant too? If the outer planets are indeed relevant, was all early astrology fatally flawed for excluding these then unknown heavenly bodies? What about the asteroid belt? Astrology is arbitrary and capricious.

Why is one's birth date relevant? How does the relative position of the Earth, sun, and planets affect a child on the day he or she is born? Since there is certainly no physical force like gravity involved, if there is a mystical force why doesn't it instead affect the child on the day of conception before they are developed? Why not at any other time during the usual nine-month human baby's gestation? What about human mucking around in biological birth dates, like c-sections and medically-forced premature births? If a baby is cut out of its mother's belly for medical reasons should that day really be its astrological birthday? Astrology is arbitrary and capricious.

If astrology indeed could affect individuals, how on earth do financial astrologers aggregate and model the individual astrological readings for the hundreds of millions of individual financial-market participants worldwide? Economists have been struggling with the problem of modeling individual behavior within complex markets for centuries. Do you really think obscure astrologers have figured out how to crunch this effectively infinite and perpetually-changing data? Astrology is arbitrary and capricious.

Why have all the major planetary conjunctions that have been zealously heralded in my lifetime not led to a single catastrophe that one would notice? Maybe because astrology is arbitrary and capricious.

Why are ancient Babylonian attempts to connect the dots in stars relevant today? The vast, vast majority of all constellations are constructed using stars that are not even remotely gravitationally related to each other. Every star within any given constellation may be tens of thousands or more light-years away in three-dimensional space from other stars within the same constellation. Why does an ancient and limited Earth-bound two-dimensional perception of three-dimensional space reality govern the affairs of men? Once again, the only conclusion to logically draw is astrology is arbitrary and capricious.

If there is absolutely zero logic or science behind the dark art of astrology, then it enters the mystical realm of faith. Faith is a powerful force and can be a great thing, but the worth of faith depends entirely on the object on which that faith is placed. Faith in absolute truth is wonderful, faith in falsehoods is utterly worthless, no matter how well-intentioned. Think about how tragic the strong pre-WW2 German faith in Adolf Hitler turned out to be for the Germans, for example.

I have tremendous respect for the ancient Babylonians and I am amazed by their achievements, but I don't think they unlocked the key to modern financial markets by observing the apparent paths of the sun and planets through a narrow band of arbitrarily named stars several millennia ago!

Astrologers always speak in riddling generalities today. If you pick up your local newspaper and read all 12 horoscopes at once, you will find that they all could certainly apply to you or any other human being on the face of the earth. If you don't believe this, have a friend of yours help prove it to you. Have your friend cut out 120 separate horoscopes over 10 days (which you haven't read before), clip off the titles, mix them all up, and throw the 120 pieces of paper in a bucket.

You then draw out a horoscope at random, read it for the first time, and try to tell what birth sign it applies to, or even harder, what specific birth sign and newspaper date it is from. Even better, perform this test on your local horoscope zealot who swears by astrology. I saw this test done several times during my university years and the results are inevitably disastrous for the credibility of astrology. The only way an astrologer or astrology follower actually knows which horoscope is which is if they wrote the horoscopes themselves! Heck, even a chump like me can recognize one of my own rants!

General astrology, as applied in daily horoscopes, is complete nonsense. On the day you or I were born any commercial airliners flying anywhere on earth exerted far more gravitational influence on us than any of the planets. If the magical astrological force that is supposed to make astrology relevant today is not gravity, then it is no other documented scientific force.

Astrology is at best a pleasant diversion for some that has no basis in reality, kind of like professional wrestling or supermarket tabloids. At worst it is a dangerous gateway that opens up a horrifying downward spiral into ever-deeper involvement in various dark occult depravities. The God of the Bible thought astrology was so dangerous for the ancient Jews that consulting the heavens to attempt to divine the future warranted death by stoning by the civil authorities.

Financial astrologers believe that the apparent movement of the planets as viewed from Earth affects financial markets in such a way as to provide tradable information. Some of them believe that the movement of planets affects people's behavior which indirectly affects the markets, while others actually claim that the markets are somehow mystically affected directly by far away Mars, Jupiter, and the other planets.

While there are some successful financial astrologers, I believe that their success comes from their own analysis of other non-astrological market factors. Financial astrology being useful in divining the future direction of the markets in and of itself is totally worthless, just like newspaper horoscopes.

There is also a simple test you can perform on financial astrologers or indeed any market analyst.

In general, a given major price trend prediction on any investment has a 33% chance of being right at any moment in time. Take gold for instance. The gold price can either go up (1/3 chance, ceteris paribus), go down (1/3 chance), or meander in a flatline (1/3 chance). Anyone, whether they use fundamental analysis based on cashflows and earnings, technical analysis based on charted past prices, star charts and planetary movements, or just go out and run over chickens and analyze the resulting smushed avian entrails, has a 1/3 chance of correctly guessing any major trend. If your financial astrologer is right on major trends only 1/3 of the time or less, you ought to seek market advice and opinions elsewhere.

It is even easier to test some daring financial astrologers because they constantly violate the First Law of Market Analysis. This crucial law states that if you are going to be foolish enough to prognosticate on the markets, you better only make a price or timing prediction, but not both. You can say gold is going to $500. Or you can say that the gold market will rise in the next three months. But you better not say both at once! Many financial astrologers make ultra-specific predictions like "because Mars is vacating Virgo's Uranus, the planets are whispering to me that gold will trade at $345.23 on May 17, 2002". If your financial astrologer is not consistently right in his or her ultra-specific predictions, there is no reason to follow them.

Over the years I have never seen a financial astrologer make consistently correct ultra-specific predictions. One may occasionally be right, but on the balance the predictions are mostly wrong and appear to be nothing but WAG's (wild-[expletive deleted]-guesses). Like you and I, financial astrologers are mere mortals and they cannot divine the future any easier than we can. It is impossible to consistently predict the future with precision unless one is God and transcendent of the physical domain of time.

A fundamental analyst can show you earnings and cashflows patterns over 100 years and prove his or her thesis to you that these things move markets. A technical analyst can show you 100-year price charts and prove how investor and speculator greed and fear lead to price movements. A geopolitical analyst can dig out world maps from the last century and prove how strategic geopolitical developments shape the future. Yet, I am certain that there is not a financial astrologer in existence that can whip out the star charts and use them alone to logically explain market or world events.

Interpretation of star charts is far too subjective to be useful, tradable, or replicable over long-term market history. Have you ever heard of a billionaire astrologer who earned his fortune trading his own capital solely on star charts? Me either.

The bottom line in this long essay is that financial astrology should be carefully approached with great caution. Yes, the ancients probably had very good reason for worshipping and fearing the planets, but to the best of my knowledge humanity doesn't have a single shred of scientific evidence today that astrology actually works.

If you find a successful financial astrologer, odds are it is the other analysis they do that grants them their insight. Most successful financial astrologers I know pay vastly more attention to technical price charts and hard market fundamentals than they do to their star charts.

Who knows? Perhaps financial astrology is a great marketing gimmick to sell research, newsletters, and books. But, after observing and studying this phenomenon for many years, I believe astrology is nothing but a bunch of hooey.


 

Adam Hamilton

Author: Adam Hamilton

Adam Hamilton, CPA
Zeal LLC.com

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Mr. Hamilton, a private investor and contrarian analyst, publishes Zeal Intelligence, an in-depth monthly strategic and tactical analysis of markets, geopolitics, economics, finance, and investing delivered from an explicitly pro-free market and laissez faire perspective. Please visit www.ZealLLC.com for more information, www.zealllc.com/samples.htm for a free sample, and www.zealllc.com/subscribe.htm to subscribe.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/