Return to site

The Golden Ratio and a Recap of 2015

Some of you may know that I've always been fascinated by the Ancient Greeks, known to recite poems by Martial on occasion (eg, nec possum dicere quare) read Seneca as a self-motivation tool, and primarily abide by the ethics of epicurianism as opposed to stoicism and even delayed my graduation for my B.A. degree by 4 months because I decided to take Latin and Philosophy courses instead of taking the required classes needed to finish my degree on time. In essence, I believe it is better to enjoy life.

One of my innate, unending fascinations has always been the golden ratio. The golden ratio is based on the fibonacci sequence founded by the Italian mathematician Leonardo Bonacci Fibonacci in 1202 and can be written as Fn = F(n-1) + F(n-2)... or also as 1.61803398875... However, what it looks like is this:

broken image

Hence why it's also referred to as the golden ratio. We are surrounded by examples of the golden ratio in art and architecture, and it gives an insight into human perception. There are also many examples in nature of the golden ratio or the fibonacci sequence, such as

broken image

and the solar system.

broken image

The Ancient Greeks were the first to create a parallel processing analogue computer called the Antikythera Mechanism that predicted planetary and solar movements that were exact to the day, week and year. This device had been discovered in 1900 buried under the sea, and if the device hadn't been on board when the ship sank off the Antikythera island in Greece several hundreds of thousands of years ago, the device wouldn't have been preserved for us to study in the early 20th century. What the Antikythera Mechanism showed was that the Ancient Greeks had already developed technology that was beyond the technological advances of its turn of the century 1900s successors to the shock of many people during the time.

broken image

The Antikythera Mechanism measures the movement of the galaxy partly via the fibonacci sequence.

Similarly, the fibonacci sequence can be calcuated for visual and auditory information, such as an image or a piece of musical composition. Leonardo Fibonacci originally utilised the fibonacci sequence in his book Liber Abaci to accurately predict the growth rate of rabbits. I also like to utilise the fibonacci retracement percentages for movements in the global stock markets.

broken image
Hong Kong's Hang Seng Index moves to the rhythm of Beethoven's Symphonies with many recurring leitmotifs.  

Typically, I've noticed that major volatility in the markets occur before the announcement of the news, therefore suggesting that major players already know the impending outcome of such movement. Two key events in 2015 that have affected the volatility of the global stock markets have been China's adjustment and devaluation of its currency in August and the US's retaliation by the Federal Reserve by raising interest rates in December. However, what is interesting is that in the Asian-Pacific markets, the Japanese Nikkei has not been significantly affected by the interest rate hikes despite being no.1 in the holder of US debt, next to China.

broken image
Japan's Nikkei has a similar pattern to a Wagnerian opera with ABA formations

This could potentially show that Japan is a growing powerhouse, and moving into the no.1 position of superpower nation whose descent had only been halted by the geological attacks of both the tsunami and earthquake in March of 2011 that had temporarily suspended all its manufacturing and industrial activities. Thus far, Japan has been 15 years ahead in nanotech and AI from the rest of the world and is the number one producer of biofuels, green energy and humanoid androids, the latter which have already infilitrated their commercial markets- from android teachers to android hotel receptionists and maids to android family companions, Japan has dominated every aspect of AI, and just recently SoftBank made the announcement to partner with the flailing IBM to help the US commercialise its less-than-stellar Watson supercomputer into the US market after Japanese scientists and engineers had invested time to make adjustments to Watson last February. 

broken image
Students at Korea Advanced Institute of Science and Technology (KAIST) take 1st place in DARPA's robotic challenge in June 2015, far outrunning Google X's Boston Dynamics.

In comparison, the South Korean market is heavily dependent on the US, and mirrors the US stock market, and in turn the US is dependent on South Korean technology, especially in nanotech and AI to help the US in global competition. Such corporations as Samsung, work with the US Govt on its defense projects, and many South Korean universities, such as Korean Advanced Institute of Science and Technology (KAIST) work with DARPA, and KAIST's scientists, along with University of British Columbia were the original builders of the D-Wave quantum computer that Lockheed Martin had funded which Google now holds vested interest in. In addition, the Gwangju Institute of Science and Technology (GIST) has an active exchange programme with Caltech and work together on many projects. I think a recurring pattern in South Korean technology companies is that the technology is often usurped by US agencies, which in turn, become absorbed into US-based startups and organisations.

broken image
US B-52 flying over South Korea this week, in an exaggerated display of ownership over the nation. 

The two Koreas- South and North, resemble the previous divisions between East and West in Germany and the current one that still exists in the two Irelands. Korea, despite being a proud race of people, has always been a nation dominated by other superpowers, from China to Japan to the US, and since its division, has worked exclusively with the US in all forms of trade and technology, but will 2016 be the beginning of the cut of the umbilical cord to have the country come into its own? In my experience, speaking with South Korean residents, I have the impression that they would like to be reunited with North Korea, however, because North Korea has become such a comedic bargaining tool for the ever-lasting presence of the US military to remain vigilant over the country, it is unlikely that reunification will happen anytime soon, especially since the US is heavily invested in South Korean technology.

broken image
The Shanghai Composite Index moves in an analogous pattern to the composition of John Coltrane's Naima, with long solos and relative periods of mellow dissonance.

China is an interesting nation, and has its own sort of rhythm. For the first time in history since before the Cold War, China and Taiwan have closed its doors to active trading of technology information with the US and now they actively limit and monitor the amount of IP that they share with the US. This action, although not aggressive, however, is making a passive-aggressive stand that they are now potentially capable of possessing more advanced technology than the US. Certainly, they were the first to commercialise their holographic monitors and phones via Takee-Estar (although many global corporations had been in a race to develop the holographic technology) and although China is not as advanced as Japan in AI, could potentially be working on their own stealth version of nanofactories.

broken image
It's official: the UK and US are no longer in an exclusive relationship

In 2015, the UK also announced that they are no longer in an exclusive relationship with the US, and will now also be courting China. Chancellor George Osbourne announced plans to link the Chinese stock market directly with the London stock market in a strategy of internationalisation of the Chinese currency. Of course, China's devaluation of its currency around the same time, didn't bode well with the US, however this new love affair between China and the UK could be one that leads to long time financial gain, however, in the short term, the Fed's whose sudden decision, akin to a jealous lover, to hike up interest rates has created some volatility in the global markets.

EDIT: The Chinese Central Bank made a move to strengthen the yuan (RMB) as I was writing this post on Monday, thus appeasing to US pressure and reiterating bullish sentiments into 2017. 

KEY PROJECTIONS: US, Japan, Hong Kong's stock markets to move towards new highs into 2017, whilst London's stock exchange to consolidate until a breakout in late 2019-early 2020 with Shanghai's stock exchange to consolidate until a breakout in mid-late 2020. 

(Disclaimer: This post was intended for educational purposes only and should not be considered as stock market advice.)