Valuation Saturation Fractal Analysis - A Real Science?

November 25, 2007
The process of validation for the hypothesis of quantum fractal growth and decay of asset valuation as precisely representative of a heretofore unknown intrinsic quantitative operative nature of the complex macroeconomic system, was earlier proposed in the final update of The Economic Fractalist: " Saturation Curve Fractal Analysis - A Real Science? In order to qualify as a true science, the subject entity must be testable by scientific method and have underlying laws that operate in the real physical environment. These laws must be repetitively provable and have reasonable predictability for different applications. Scientific testing in college biology, chemistry, and physics laboratories usually results in experimental values that roughly support the underlying mathematical equations and theoretical constructs. If indeed complex economic systems travel by the simple quantum laws that observational fractal analysis suggests, a similar validity should be testable and provable, retrospectively and prospectively, in the great laboratory of readily obtainable asset valuation saturation curves."
The valuations of General Motors have often been used because of GM's remarkable likeness at small scale to the United States' current position of debt, entitlements, obligations, and global competitiveness. GM's second subfractal of 15/36/30 x/2.5x/2x weeks with its recent decline below its one year trendline has been used a proxy microcosm marker for the United States' true underlying debt-driven supporting money supply. Because of its largeness and its plurality of world equity value, the Wilshire's hourly, daily, weekly, monthly valuations have been primarily used to examine and test the macro performance of simple 'laws' contained within ' The Economic Fractalist ' macroeconomic saturation quantum fractal hypothesis: the elegantly simple fractal growth proportionality relationship: x/2.5x/2x, the second fractal's sine qua non nonlinearity between 2x and 2.5x, the primary simple decay relationships conforming generally to a y/2.5y/2.5y fractal pattern, and the principal that decay is confluent and begins in the terminal portion of growth. The Wilshire's saturation tops of 19 July 2007 and 11 October 2007 were prospectively identified using the simple quantum relationships. The Wilshire's 11/27/22 x/2.5x/2x month growth from October 2002 and 75/150 week x/2x growth since March 2003 resulted in the saturation July 2007 top. The Wilshire's day- price-volume triple-product area of May-June-July 2007 still exceeds that of the September-October-November 2007 similar triple-product area. July's 20 day third fractal of a12/30/20 day fractal sequence became the base for a 20/50/40 day fractal sequence ending on 11 October 2007. 11 October is contained within a second fractal with a 17-18 day first fractal base beginning on 16 August. 11 October may well be contained within the first decay base with synchronized classic and caricatured second fractal decay of multiple first fractal bases of 70 years, 8 years, 75 weeks, 62 weeks, and 41 weeks. There are four competing simple mathematical models of quantum fractal decay representing this nonlinear synchronized second fractal area.. Currently as of 25 November, the 13/24 of 32-33/32-33 day decay fractal appears most likely. If this model is correct the Wilshire's 5 year trendline will likely be breached between days 26 and 32-33 of the second fractal. If this decay model is correct, it is likely that gold and oil will also see devaluation during this time frame with the dollar gaining in valuation against other currencies. The other fractal possibility from the 16 August low is a 17-18/44/11 of 34-35 day deteriorating growth fractal. If there is enough ongoing debt expansion, perhaps via the vehicle of holiday seasonal debt, the composite US equity markets could positively maintain its third fractal growth until the new year. Decay after this point would still be within the time frame area of synchronized second fractal nonlinearity and consistent with the underlying quantum laws.