"Nothing happens by chance. We can know what is happening everywhere in capital markets, with foreign currencies, and in the commodities markets. When I worked at Goldman Sachs before I started my own company, I had returns of 40% using this method," Charles Nenner, who is chairman and president of Charles Nenner Research Center, which advises hedge funds, banks, investment houses and private clients, said in an exclusive "Globes" interview.
And what about wars?
"If markets don’t move by chance, then wars don't occur by chance either. I believe that there will be a large-scale war by the end of 2012 or the beginning of 2013. That doesn't mean that it will break out immediately, but if we look back ten years from now, we will be able to say with certainty that it began during this period."
Nenner, a religious Jew from Holland currently residing in the US, developed an algorithm designed to predict share prices, foreign currency and commodity rates, and even the next war. As a religious Jew, he believes that the lack of free choice is a motif that enables one to predict events ahead of time, that they are not necessarily dependent on logic or psychology of the individual. His theory is based on mathematical models that enable people to identify behavioral patterns in objects, and from there to predict how they will behave in the future.
Although he is not well known to the average Israeli investor, Nenner is a popular guest-speaker on leading economic TV shows such as CNBC, Bloomberg, and FOX. Before he founded his investment consulting firm, Nenner worked at Goldman Sachs, which today is one of his clients. Other clients are Deutsche Bank and Morgan Stanley.
Nenner's CV includes several successful predictions. Among others, in the summer of 2006, he claimed that the Dow Jones would peak around 14,500 points, and in October 2007 he warned that the US market is reaching its peak. After the mortgage crisis, in February 2009, Nenner claimed that markets are heading for a rally that would bring the S&P 500 down to around 1,000 points. Conversely, not all of his predictions have come true, to say the least. In an interview with an Israeli economic site in December 2008, Nenner predicted that the Israeli real estate market would fall 30-40% in 2009.
Not only are Israelis unfamiliar with Nenner, but he has often been criticized, sometimes sarcastically, for the model he built and for his predictions. "Israelis must internalize that I engage in a different type of research. No one is trying to accurately predict markets like I am," Nenner says. "Everyone in Israel thinks they are super smart. You listen to Roubini, so why don't you try to listen to me too?"
Why is it so important to you to be recognized in Israel?
"Granted, I have a business, but in the end all I want to do is help the State of Israel, and one way to do that is to help its economy."
There's no money issue here?
"It's not the central reason. Israel is a relatively small market, and we are active in the US, Europe, and China. The issue is that Israelis are not willing for someone from outside to teach them something, and I am close to losing my patience trying to explain myself to people here."
It is all about cycles
Nenner confidently presents his model, and rejects all attempts to question his absolute truths. Demonstratively, he lifts up his cup of coffee and explains, "Just like you know that if I let go of this cup it will fall - I know that my method works."
Nenner in effect is trying to identify consistency in occurrences that are currently thought of as chaotic, such as a stock exchange crash or a terrorist attack. From a scientific point of view, Nenner compares his discovery to achievements, such as Newton's Law of Gravity, or Einstein's Theory of Relativity, which at the time shed light on existing theories, that had not yet been deciphered.
According to your model, what do you predict markets will do in the short-term?
"The market will continue falling in the short-term end of February, beginning of March in Israel as well as overseas. The S&P 500 will rise to a level of 1,449 points, and will then fall. In global markets, the shekel will strengthen against the dollar in the next few weeks, and will then begin to decline."
Nenner bases his predictions on a model that he developed for the TA 100 Index. He believes that the index will fall over the next two months, and will stay low until August 24, and might even reach a low point of 850 points, which is a 20% drop from its current level.
Nenner showed some interest in Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) shares, about which he is quite optimistic, and believes that the upward trend that it is currently showing will continue in the upcoming weeks. "Only a closing price under $42 would be a sign to sell," Nenner says.
"Explanations for events can always be found. If Teva publishes a positive report, the share price will go up, and the media will report that the market is reacting to the report. Conversely, if it goes down, you will say that its shares have peaked, and therefore market prices can only go down," Nenner says with a smile, and adds, "But actually it's all a matter of cycles. If we are currently in a negative cycle, events in the market will cause falls, and vice versa. The thing is, everyone is smart enough to understand my method, but they are not able to emotionally accept that everything can be predicted ahead to time."
Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012