< HOMEPAGE





Midtown Closeout - Fine Jewelry Liquidations at True Below Wholesale ...

Along with the largest selection of below wholesale diamond jewelry, gemstone jewelry in solid gold setting at the absolute lowest prices available for resell.

Read full post here. (c)

Custom Jewelers: Diamonds at Wholesale Prices: Estate Jewelry Buyers ...

Los Angeles Diamond Factory offers custom jewelry at wholesale prices. Experience our first rate ... buyers of loose diamonds as well as diamond, gold and platinum jewelry in any ...

Read full post here. (c)

Ka-Poom Theory - How to Invest in Bubble Economies With Black Swan Events

In this post, we'll take a look at the Ka-Poom Theory, a framework for investing in "bubble" economies -- economies driven by the creation of asset bubbles.

Ka-Poom Theory: What It Is

Ka-Poom Theory is a theory that postulates how the asset bubble cycle works -- meaning how bubbles are created, destroyed, and reborn. It was developed by Eric Janszen, former venture capitalist who now writes commentary at iTulip.com.

Ka-Poom Theory offers the following framework for understanding bubble cycles:

1. The Bubble is created. Ka-Poom Theory posits that the creation of the bubble is a result of interest rates being kept too low by the central bank. This is the same conclusion reached by the Austrian Business Cycle Theory.

2. Also like Austrian Business Cycle Theory, Ka-Poom Theory expects the bubble to begin deflating at some point. In addition, though, Ka-Poom Theory expects a "black swan event" -- an unpredictable, external, outlier event that has a monumental impact and, in the context of Ka-Poom Theory, a deflationary effect. It does not, however, cause a deflationary spiral. Thus, Ka-Poom Theory refers to this state as disinflation.

3. The central bank will respond to disinflation with inflationary policies that will take approximately 12 months to impact the markets. The period of disinflation will be erratic.

4. The black swan event is the "ka" of the Ka-Poom Theory. The "Poom" is the subsequent re-inflation of the money supply. Deficit spending and inflationary policies initiated by the Fed dictate to what sector the re-inflation of the central bank will go.

Ka-Poom Theory posits this is what has been happening in the US economy since the dot com bubble, and thus is the current framework for understanding thus US economy.

Assumptions of Ka-Poom Theory

The most critical assumption the Ka-Poom Theory makes is that the central bank has the power to inflate the market at will, invariably. In other words, Ka-Poom Theory is based on the premise that if the Federal Reserve wants to inflate and create higher prices, it can -- by printing money, buying up assets, working through the credit market, or inducing foreigners to sell Treasury bonds and dollar holdings. It also assumes that the results of the central bank's actions are not instantaneous; the gap between their policy enactment and the corresponding re-inflation of asset prices is a period referred to as disinflation.

Because of this assumption, Ka-Poom Theory is essentially a framework for understanding how a planned economy works.

Implications of Ka-Poom Theory for Traders and Investors

To the extent that Ka-Poom Theory is valid, a few deductions can be made for traders and investors:

1. The period of disinflation -- what Ka-Poom Theory argues we are in now, which is characterized as the period between the Federal Reserve's policy enactment and the corresponding effects -- is deemed to be erratic. Janszen prefers to stay out of the market during these times.

2. In a debt-based bubble, the long-term bond market will likely be where the arbitrage opportunity is, in the sense that bond prices will fall as the market begins to re-inflate.

3. In order to understand what sectors will be set to inflate -- where the next bubble will be found -- Ka-Poom Theory looks at government spending to lead the way.

Simit Patel is a currency trader and contributing analyst at InformedTrades.com, a site offering free courses to help individuals learn to trade the world's financial markets . You can visit Simit's blog on InformedTrades by clicking here

NAVIGATION

Recession-Proof Your Restaurant

How to Increase Sales is Process Driven and Begins With Existing Customers Not New Ones

The Best Time of Year for Yachting

Stop Selling Your Gold!

Luxury Watches For the Discerning Woman

The Price of Gold in Troubled Economic Times

Buy Gold UK

What's the Next Frontier in Philippine's Franchising World?

How to Invest in Commodities

Labret Jewelery For Beautiful Eyebrows!

Nyhm's Warcraft Guide Review

Now is the Time to Invest in the US Dollar

Ka-Poom Theory - How to Invest in Bubble Economies With Black Swan Events

Fast Cycle Investments - Buying Gold and Silver

Ideas For Jewelery Making Using Gemstones

An Introduction to Online Trading Futures

Selling Gold For Cash - Avoiding the Pitfalls

Cyprus Apartment Investments - Will the Euro Boost Prices?

If You Are Thinking of Commodity Trading, You Should Learn About Futures

Dollar Deception - How Banks Secretly Create Money

Zari Industry Losing Glitter Amid Turbulent Times

Collecting and Investing in Rare Gold Coins

How to Trade Commodities - The Basics For Everyday People

World of Warcraft - Buying Gold - Is It Worth the Risk?

Gemstone Bracelet Guide and the Myth of Precious Stones

What Losing Traders Do - Multi Millionaire Trader Gives You Some Priceless Pointers

The Federal Reserve and its Role as U.S. Money Cops

The Benefits of Titanium Wedding Rings

Low Risk Investments

Being in the Floor of a Great Idea in Trading

Should You Choose Salehoo As Your Wholesale Source?

Jewellery Stores - A Glance At World's Best

Safe Bets For Your Investment Portfolio

What to Invest Money Into - A Guide

How to Make Easy WoW Gold For Your First Mount

Girls and Dress Up Games

Ethical Investing

How I Called the Breakout in Gold Three Weeks Ago

Making Your Note Pad Printing Special

4 Ways to Survive a Recession

Diamond and Bling Earrings - On a Budget

Nyhm's Warcraft Guide Review

Reasons to Not Invest in Crude Oil Futures Prices

What to Do When Buying Gold Coins

Will Oil Barrel Prices Stay Low?

How to Start A Food Ministry

7 Best Mutual Funds For 2009

Boiling Oil Prices Vs Buyers Cartel

Diamond Engagement Ring - Ensure These Quality Parameters

Commodities Trading 101 - Do You Know The Basics Of Commodities Trading?

Discount Diamond Rings

How to Know an Old Coin Value

Should We Bail Out the Auto Industry?

Dollhouse Miniature Deals You Can Track Down

Radio Controlled Boating As a Hobby

Which Mining Company is the World's Biggest Gold Producer?

Man-Made Diamonds; A Buyer's Guide

Getting Information on the Newest PC Games

Collectible Barbie Dolls - Guide For Doll Collectors

Ka-Poom Theory - How to Invest in Bubble Economies With Black Swan Events

The Rising Gold Market

Sogo Investments

World of Warcraft - Buying Gold - Is It Worth the Risk?

Future Contract Trading Concept You Do Not Want to Miss

If You Are Thinking of Commodity Trading, You Should Learn About Futures

H2O Mop Review

Reality of Realty and Markets

Best Commodity Futures For Beginner Traders

Equipment Used For Gold Prospecting

How to Stiffen Crochet Projects

Collectible Barbie Dolls - Guide For Doll Collectors

Commodities - Bull Market Ready to Resume

The Coming Tsunami

PC-Based Video Games - Better Than Your Neighbor's Console Games?

The US Bank Bailout Plan is Full of Dangers

Turn Scrap Gold to Cash

Reactions to the Housing Bubble Burst

Guide to Buying Used Tractors Online

Economic Survival in the 21st Century - the Three Key Questions to Ask

Candlesticks Point to Copper As a Leading Indicator

The Top 13 Apartments in Lakewood Ohio's Gold Coast

Lucrative Investments - Taking Advantage of Closeouts

Silver and Gold Bullion Coins

Cruise Line Loyalty

Warcraft Tycoon Gold Guide Download

Gathering the Gold in Wrath of the Lich King

Nothing Says Garden Pond Quite Like Gold Koi Fish Swimming Around

Why Covered Call Traders Lose Money

All Is Well In Stepfordville - The Pre-Election Chicanery Of The Plunge Protection Team

Last Minute Valentine Gifts

Legal Tender - Silver Bullion Coins For the Collector Or Investor

Gold Key Words For Your Bank Account

Make Easy Gold in WoW

Diamond and Gold Jewelry Buying 101

What's the Next Frontier in Philippine's Franchising World?

Get The Most Gold In Warcraft Quickly - Read This Now

How to Purchase Your First Beginner RC Airplane

Skyrocketing Fuel Prices - The ATF (Aviation Turbine Fueol) Effect

Create Warcraft Riches

Futures Vs Stocks - 6 Key Differences For Traders

© 2010