Synthetic Systems

Synthetic Systems is an original modeling algorithm designed to give us a broad picture of the financial markets history and outlook. For this purpose, these markets are represented by four asset classes: US TBills, US TBonds, Equities, and Commodities. US TBills is calculated at a maturity and duration of zero (no principal change with changes in interest rate), and effectively represents Treasury money markets, US dollars and “cash equivalents”. US TBonds is calculated at infinite maturity (interest only, zero coupon duration reciprocal of rate) and effectively represents annuities and the longest maturity Treasury bonds. Copper and gold represent physical commodities. Equities includes all stocks, foreign and domestic. Charts for the last few years are presented below. The charts show natural log total return, so that the vertical scale roughly represents percentage changes.

The annual charts are run at the beginning of each year, and cover the past twelve years and the next four.  The quarterly charts are run at the beginning of each quarter, and cover the past twenty four quarters and the next eight.

Annual Charts

Quarterly Charts

Annual Charts

Quarterly Charts

 

Financology Dollar Index

The Financology Dollar Index charts the real value of the US dollar. The plots are logarithmic – the natural log of the index for charting purposes –  with the index itself referenced to the beginning of 2000.

Financology Dollar Index