The Ring-A-Ding UFOs

By Bob Tralins
Belmont Books. 1967. Paper.

“Ring-a-ding” was an expression popularized by Frank Sinatra and his Rat Pack pals. How did it end up being combined with UFOs and a tied-up woman in go-go boots on the cover of this 1967 spy novel? That was a stroke of marketing genius.

The Ring-A-Ding UFOs was the third in a series featuring femme fatale Lee Crosley, aka The Miss From S.I.S. She also appeared in an eponymously titled book and The Chic Chick Spy, both published in 1966.

Other works by author Bob Tralins (and there were many) include 5 Wild Dames, Primitive Orgy (both published in 1961; the guy was a writing machine), Law of Lust (1962) and Jazzman in Nudetown (1964).  Based on the titles alone, they remind me of the cheap paperbacks my father kept in the basement when I was a child. 

Further Reading 

Allmusic Guide. Ring-a-Ding-Ding! by Frank Sinatra.
FantasticFiction.com. List of Books by Robert Tralins.
PulpCovers.com. Pulp Covers: The Best of the Worst. 
Wikipedia. Robert Tralins. 

Dow 3000

by Thomas Blamer and Richard Shulman
Wyndham Books, 1982; 206 pages
ISBN 0-671-43224-9

When Dow 3,000 was published in 1982, it was advertised in the back pages of The Wall Street Journal, where dubious books about economic collapse, market timing and investing in gold were often promoted.  As the title implies, it predicted that the Dow Jones Industrial Average would increase to around 3,000. The index was around 1,000 at the time, so achieving that prediction would require it to triple.  

With the hubris of youth, I told my friends that this was ridiculous.  I had recently earned a bachelor’s degree in finance, so I was pretty confident I knew what I was talking about. Here, it seemed, was yet another case of overreach by financial advisors who would push the envelope unmercifully to get customers to buy stocks. 

Dow 3,000 is long out of print, but I recently picked up a used copy. It's my way of keeping myself humble, because the 3,000 I scorned so long ago seems ridiculously small compared to where the index closed today: just over 26,000. 

I spent an interesting afternoon paging through this book recently. To my surprise, it's far from being promotional. It's actually a careful analysis based on fundamental valuation methods and a seven-year forecast horizon: Dow 3,000 by year-end 1989. 

Readers of my generation will recall the horrendous conditions in place when this book was written. In late 1980, when the manuscript was submitted for publication, U.S. markets were in turmoil, beset by double-digit inflation.  30-year Treasury bond yields were in the 12% to 14% range. The Dow Jones Industrial Average was trading well below its book value, and at less than 8 times earnings.

In this bleak landscape, Blamer and Shulman did a two-pronged valuation analysis. 

• Method #1 was a price-to-book value analysis. The authors presented historical data showing that over long periods, the Dow tended to trade at or above "inflation-adjusted" book value. (Note the focus on inflation, which is everywhere in this work.)  Then they projected the inflation-adjusted book value of the index seven years into the then-future, based on assumptions about return on book value, dividend payout and retained earnings. Result: a projected book value of 3,150. Assuming the market would eventually trade at a price-to-book value ratio of 0.95, it's easy to get to Dow 3,000 with this valuation method.
• Method #2 was a price/earnings forecast. Blamer and Shulman assumed that the price-earnings multiple for the Dow would eventually return to a level consistent with its 60-year average, and that the earnings of the Dow Jones companies would rise in line with inflation. Applying a P/E multiple of 14 to their earnings forecast, they projected the value of the Dow to be around 3,400 by year-end 1989. They then presented an earnings forecast for each of the companies in the index. 

So there you  have it: Dow 3,000 within seven years, supported by two conventional valuation methods. What I thought was stockbroker overreach was actually a nicely reasoned case for multiple expansion and regression to the mean: price/book and price/earnings ratios would eventually return to levels more in line with long term historical averages, driven by a return of confidence. 

Of course the devil is in the details. Blamer and Shulman's forecast assumed an 8% annual inflation rate. That's understandable in light of what was going on when the book was written. But the actual inflation rate turned out to be 3.7% over their forecast period. So something else must have happened to offset that faulty assumption, because the authors of Dow 3,000 came very close to being right about the stock market recovery. Although the Dow Jones Industrial Average did not reach 3,000 by year-end 1989, it did so the following year. In the treacherous realm of market forecasting, that's a fine outcome.  

But what I marvel at is how far the index has climbed since then. As noted previously, the Dow closed at around 26,100 yesterday. An investment of $1,000 in the Dow at year-end 1981, just before Dow 3,000 was published, would be worth an eye-popping $29,832 today. That's a compound annual return of 9.86% for 36 years.

I am humbled. All those years ago, if I’d thought it out carefully and applied what I’d learned in my finance classes, it would have been apparent that "Dow 26,000" was within reach over a 36-year forecast horizon. Regrets aside, this is a great example of the power of compound growth. If you can grow something – anything -- at 9.86% per year for 36 years, you’ll get an amazing result at the end of the line. 

Historical data courtesy of Macrotrends.net: 

•  Inflation
• 30 Year Treasury Yield

Birthday Numerology: The Power of 64

Today is my 64th birthday. This has opened my eyes to many things. I've come to the realization that 64 is a special number. A number great and powerful, like the Wizard of Oz. 

If you divide 64 in half, the result is 32. If you continue the process as far as possible, the result is always a whole even number until you reach the number 1, as shown below: 

• 64/2 = 32
• 32/2 = 16
• 16/2 = 8
• 8/2 = 4
• 4/2 = 2
• 2/2 = 1. 

The fact that you can extend the sequence shown above all the way back to the number 1 is impressive, at least to this blogger. To the ancient Greeks, the number 1 symbolized the first thing that came into existence when the universe was created. Ancient numerologists believed the number 1 represented the origin of all things. All numbers can be produced by adding 1, and only 1, to itself. For example, 3  = 1+1+1. For certain monotheistic religions, 1 represents God.

The divided-by-two sequence works because 64 is a doubly even (or evenly even) number, which means it is divisible more than once by 2.  A doubly even number is even and its quotient when divided by 2 is also even.

Viewed from another angle, 64 can be expressed as: 

• 8 to the second power = 64. Therefore, 64 is a square number (8 x 8).  A matrix with 8 rows and 8 columns contains 64 squares. That is the number of squares comprising a chess or checker board. 
• 4 to the third power = 64. Therefore, 64 is also a perfect cube (4 x 4 x 4). 
• 2 to the fifth power = 64. I am still groping for the meaning of that one.  

These ideas are not original. The Pythagoreans believed that we live in a world of numbers, i.e. that all things are made up of numbers and "are ruled by mathematical constancies and regularities," as Will Durant said (see Further Reading below).  All odd numbers were believed to be masculine, and even numbers feminine. The number 5 symbolized marriage because it is the sum of the first odd number and the first even number (2 + 3 = 5).

"The so-called Pythagoreans, who were the first to take up mathematics, not only advanced this subject, but saturated with it, they fancied that the principles of mathematics were the principles of all things." Aristotle, Metaphysics 

"The most important and first study is of numbers themselves: not of those which are corporeal, but of the whole origin of the odd and even and the greatness of their influence on the nature of reality." Plato, Epinomis

"The best-known instance of numerology is the “number of the beast,” 666, from the biblical Revelation to John (13:18). Curiously, Revelation is the 66th book in the Bible, and the number of the beast occurs in verse 18, which is 6 + 6 + 6. " Encyclopedia Britannica, Number Symbolism

My brain is whirling, on fire with numbers. So many numbers. The year ahead is going to be a great one, driven by the power of 64, because today is my 64th birthday.  But wait - the year ahead is actually my 65th year of life. Last year was my 64th year of life.  Perhaps last year was my special year and I didn't even notice it. Patterns and mysteries can be found wherever you seek them, if you just search hard enough. Whether those patterns mean anything, I cannot say.

Further Reading

Durant, Will (1953). The Story of Philosophy. New York: Simon and Schuster.

Hall, Manly P. (2003). The Secret Teachings of All Ages. New York: Penguin Group.

Michel, John (1971). The Dimensions of Paradise: Sacred Geometry, Ancient Science, and the Heavenly Order on Earth. United Kingdom: Garnstone Press

Stewart, Ian. Number Symbolism. Encyclopedia Britannica. Retrieved from https://www.britannica.com/topic/number-symbolism#ref849704 January 17, 2018.

Wikipedia. The Number 64. Retrieved from  
https://en.wikipedia.org/wiki/64_(number) January 2, 2018.