Synthetic Systems is a Financology 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 Treasuries, Equities, Copper and Gold. US Treasuries represents the broad Treasury market from zero to thirty years maturity, triangle weighted inversely to maturity to approximate the total marketable Treasury distribution. Copper and gold represent the elementary physical commodities. Equities includes all common 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.
Financology Dollar Index
The Financology Dollar Index charts the real value of the US dollar. It is based on the axiom that human time is the fundamental unit of value. The plots are logarithmic – the natural log of the index for charting purposes – with the index itself referenced to the beginning of 2000.