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I used to be a huge fan of analogs. So much so that I dedicated an entire section of SocialTrade to them. There are at least two huge problems with analogs, however:

  1. They usually don’t work;
  2. They’re often so far-fetched and poorly rendered, they aren’t even valid analogs.

As much as I love our dear friends at ZH, they do this kind of thing all the time. That is, offer up an analog which isn’t a decent analog in the first place. One they kept producing week after week (until it was so non-credible that it became pointless to show it anymore) was this one:

In spite of the above analog never coming even close to happening, ZH just rolled out an article today completed dedicated to the notion that 2019 is the new 1987. I offer you the following:

So whereas the first one is the item bears could salivate over, now ZH is offering up the bulls something to grab on to. And, as I hope you can see, the 1987 is even a more terrible “fit” to the current price than than the 1937 analog was. Talk about trying to make a round peg fit into a square hole!

On rare occasions, analogs actually do work. For instance, early in December 2018, there were some analogs showing a sharp descent coming in the market (although really, really sharp and apocalyptic, not the relatively modest downturn we saw). But, on the whole, I’d say that analogs are often more interesting conversation pieces than predictive tools.

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