Since I learned econometrics at a university, I can analyze the time series data.

For example, I can predict what will happen to the stock price based on the correlation between population bonus and stock price.

This time, I predicted the change of Shanghai Composite Index by using a correlation with population bonus

In this analysis, I use the following data.
1. Chinese early 40's population by United Nations estimation.
2. Chinese births 44 years ago 
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Prediction by the early 40s population


At first I estimate the future stock price by using the early 40s population.

Because the stock price is generally to rise exponentially, I analyze the relationship with the early 40s population by using a natural logarithm of the stock index.

The first following scatter diagram shows the relationship between Shanghai Composite Index and  the early 40s population by UN estimation.

The second following scatter diagram shows the relationship between natural logarithm of Shanghai Composite Index and the early 40s population.

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You can find a beautiful linear relationship between the natural log of Shanghai index and the early 40s population.

Decision factor of this linear regression is approximately 0.59,  a relatively high number.

Statistically speaking, the value of decision factor over 0.5 is a good value. 

By applying a numerical formula (y = 0.022x +3.884 R2= 0.5958) to the early 40s population, I can estimate  a change of the Shanghai Composite Index.
 
As a result of estimation, I draw the following scatter diagram and the chronological order graph.

According to the early 40s population  (the so-called spending wave proposed by Harry Dent) , Shanghai Composite Index will be bottomed out in 2021.
 

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Prediction by the number of births 44 years ago 

The following scatter diagrams shows the relationship between Shanghai Composite Index and the number of births dating back to 44 years.

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You can also find a beautiful linear relationship between the natural log of Shanghai index and the the number of births 44 years ago .

Decision factor of this linear regression is approximately 0.62, a relatively good number. 

Because this value is higher than the value estimated by the early 40s population,  you can get a more accurate estimation.

By applying a numerical formula (Y = 0.013 x 4.956 R 2 = 0.6281)  to the number of births 44 years ago, I can estimate  a change of the Shanghai Composite Index.
 
As a result of estimation, I draw the following scatter diagram and the chronological order graph. 
 
Shanghai Composite Index will bottoming out in 2021 if based on the number of the births 44 years ago.
 
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Change of the future Shanghai Composite Index

To summarize the results of this analysis, Crush of Shanghai Composite Index has just begun.

We will face very difficult situation for next 6 years.

At the end of 2015, the Shanghai Composite Index will be under 3000.
 

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Resources

China number of births


1929 5,045,743
1930 6,499,332
1931 5,792,092
1932 6,503,311
1933 7,456,399
1934 7,220,066
1935 7,898,592
1936 8,248,125
1937 8,128,275
1938 8,611,865
1939 7,574,442
1940 9,141,141
1941 8,925,171
1942 8,869,780
1943 8,821,540
1944 9,708,711
1945 10,045,173
1946 10,858,446
1947 11,737,540
1948 12,083,027
1949 13,913,927
1950 14,711,260
1951 14,413,123
1952 17,236,621
1953 16,745,695
1954 18,513,434
1955 18,612,172
1956 17,364,027
1957 18,998,424
1958 17,135,981
1959 13,059,787
1960 14,686,726
1961 11,414,017
1962 20,923,112
1963 27,866,189
1964 24,144,848
1965 24,799,129
1966 24,828,470
1967 21,736,582
1968 27,718,516
1969 25,018,386
1970 28,012,344
1971 25,160,381
1972 24,800,391
1973 23,630,435
1974 22,874,423
1975 21,136,635
1976 20,491,797
1977 17,931,155
1978 18,831,591
1979 18,924,822
1980 18,393,809
1981 19,122,938
1982 23,100,427
1983 20,065,048
1984 20,313,426
1985 20,429,326
1986 23,190,076
1987 25,282,644
1988 24,576,191
1989 25,137,678
1990 26,210,044
1991 20,082,026
1992 18,752,106
1993 17,914,756
1994 16,470,140
1995 16,933,559
1996 15,224,282
1997 14,454,335
1998 14,010,711
1999 11,495,247
2000 13,793,799
2001 17,020,000
2002 16,470,000
2003 15,990,000
2004 15,930,000
2005 16,170,000
2006 15,840,000
2007 15,940,000
2008 16,080,000


Chinese 40-44 years population by UN


(thousand)
1950 32,479
1951 32,702
1952 32,692
1953 32,768
1954 33,069
1955 33,592
1956 33,854
1957 34,471
1958 35,204
1959 35,775
1960 36,053
1961 36,100
1962 35,789
1963 35,397
1964 35,286
1965 35,627
1966 36,161
1967 37,033
1968 38,144
1969 39,355
1970 40,585
1971 41,646
1972 42,875
1973 44,123
1974 45,209
1975 46,044
1976 46,716
1977 47,197
1978 47,526
1979 47,746
1980 47,896
1981 48,125
1982 48,181
1983 48,324
1984 48,897
1985 50,092
1986 51,581
1987 53,609
1988 56,234
1989 59,559
1990 63,605
1991 68,251
1992 73,876
1993 79,636
1994 84,245
1995 86,953
1996 88,246
1997 87,526
1998 85,708
1999 84,230
2000 83,961
2001 84,449
2002 85,894
2003 88,327
2004 91,682
2005 95,861
2006 100,947
2007 106,926
2008 113,067
2009 118,315
2010 121,976
2011 124,062
2012 124,778
2013 124,041
2014 121,808
2015 118,166
2016 113,179
2017 106,699
2018 99,786
2019 94,028
2020 90,424
2021 88,888
2022 89,390
2023 91,551
2024 94,660
2025 98,181
2026 102,268
2027 107,019
2028 111,635
2029 114,956
2030 116,284
2031 115,745
2032 113,079
2033 109,056
2034 104,961
2035 101,608
2036 98,940
2037 96,951
2038 95,380
2039 93,713
2040 91,650
2041 89,413
2042 86,938
2043 84,433
2044 82,236
2045 80,555
2046 79,412
2047 78,734
2048 78,389
2049 78,151
2050 77,859


Shanghai Composite Index 


1990 100
1991 293
1992 780
1993 834
1994 648
1995 555
1996 917
1997 1194
1998 1147
1999 1367
2000 2073
2001 1646
2002 1358
2003 1497
2004 1267
2005 1161
2006 2675
2007 5262
2008 1821
2009 3277
2010 2808
2011 2199
2012 2269
2013 2116
2014 3235