Latest posts by Livio Nespoli (see all)
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1. Albert Einstein was born on Pi Day
The famous set of proofs known as Einstein’s equations use pi to support the field equation relating the curvature of space-time to an energy source. The amount of gravity is proportional to the amount of energy and momentum. While I don’t purport to fully understand this equation, I do know that it provides evidence for the theory of relativity, so it is super important.
2. Pi can compute the size of the universe down to the last atom.
3. The Stock Markets Work In Pi Cycles
Everyone knows that tidal patterns are present in our oceans. The moon applies a gravitational pull to the earth as it rotates. This causes the water on the face of the earth to literally be pulled towards the moon, creating a lower or higher tide level throughout the rotation. In some cases a spring tide is experienced and the changes in water level are more dramatic than normal. Tidal charts are readily available and create very accurate estimates of exactly when the high and low points of the cycle will be reached. If your ship can only leave the harbor safely at high tide the chart will tell you exactly when that event will occur.A thorough understanding of tidal patterns is applicable in situations other than coastal living; most importantly for the purposes of this article, markets. Consider the graph below and assume the Y axis measures price and the X axis measures time:
Over time, several brilliant economists objectively noted such cycles. Nikolai Kondratiev was one of these whose work formed the basis for many economists that followed him. Kondratiev discovered that Western Capitalist economies tended to form 50- to 60-year cycles of boom followed by depressions. This study was refined into measureable business cycles that have since been called Kondratiev Waves. The risk that accompanies the ability to spot these types of cycles is that powerful, oppressive leaders fear that the economist may use this ability to threaten their power. Kondratiev suffered the fate of many visionaries. After serving an eight-year sentence in a Soviet prison he was re-tried, sentenced and executed all in the same day.
Some readers will write this off as an action that only an oppressive regime such as Stalin’s Soviet Union could commit. While this thought seems to match up with what was taught in civics class, it deserves further review.8.615384615 * 365.25 = 3146.76923062
This number jumped off the page immediately. It was exactly Pi * 1,000. Pi is a very significant number and throughout the course of history it has emerged in many aspects of human life. The number is a mathematical constant and represents the ratio of a circle’s circumference to its diameter. The history of this strange number sequence dates back as far as 2,000BC. Several instances of its use are recorded in ancient Egyptian history.
If Pi was so relevant in geometric structures, especially circles, then logically there was a connection to these cycles. Armstrong determined that the cycle would include two 4.3 year parts. Each of those parts would include a 2.15 year rise to a crest and similar 2.15 year return to the mean. Six 8.6 year cycles would form a larger 51.6 year cycle connecting with Kondratiev’s findings earlier that century. Then, six 51.6 year cycles connect to form a 309.6 year super cycle. With these findings algorithms correctly predicted the 1987 US stock market crash, the 1989 all-time Nikkei high, the Russian sovereign debt crisis and the peak of the housing boom.
Humans seek certainty and are constantly searching for a linear path through life when none exists. What intelligent economists realize is that the Pi model predicted shifts in energy. These energy shifts could be characterized as turning points. At times they predicted events to the day but more importantly they predicted when the tide would begin to move in another direction. In the chart displayed above this would represent the red line or the long-term trend.
Nearly all significant investment profits are realized when trading with the major Pi trend. Just merely understanding that there are cycles in every aspect of an economy is an acceptable first step. Only then can you realize that the most inefficient investment philosophy is buy and hold.
The illustration below visually clarifies out entry and exit arrows above that protects and grows your money more efficiently.