Posted originally on Jan 26, 2026 by Martin Armstrong |  

QUESTION: Mr. Armstrong, you warned that Iran would face a crisis in February 2026. You also said Iran would enter a period of extreme conflict with the turning point in 2024. Now we have ships moving to Iran. Socrates has been showing a sharp rise in volatility beginning in February into September. I understand you are a trader and not a theoretical academic. Did you have any idea in creating Socrates that you not just disproved Random Walk Theory, but you created a system that does more than just forecast markets?

Robert S.

ANSWER: The September 2022 protests in Iran began this last wave which does not end until early 2027. This is the culmination of the Islamic Revolution that began in 1979. If you look at a chart of a market, what you will typically see is that a bull market is a longer drawn out period of time than a bear market. There are basic cyclical actions generated by human emotions insofar as we tend to take a longer period of time to gain confidence in something but we tend to lose that confidence in the blink of an eye.

Socrates proves every single day that the BS of Randam Walk and Efficient Market Theories are absurd for unless you are a trader and look into the eyes of your opponent, you will never comprehend the world economy. It is like playing poker. People do not always bet on fact. Sometimes its a gut feeling – a hunch. Everyone acts out of their own self-interest and that combination is so fundamental to everything, those who seek to control society and rule over us from above have no respect for we, the Great Unwashed. It is always about them – not us.

When I created Socrates, it was because I was a trader.  I was interested in hedging from the 1970s because I was a market maker in gold. Because I was probably the first to venture into the field of forecasting foreign exchange, I ended up with clients around the world. Our reports use to go out by telex and in the ’80s the cost could be up to $75 per market per day. So we had only the biggest clients back then because the average person could never afford the communication costs. That was the reason I began to open offices around the world to bring down the communication costs.

Video Player

00:00

01:22

As one of the first International Hedge Fund Managers from 1985, Socrates was an amazing assistant. It was teaching me things by forcing me to look at things that were not always obvious at first glance.

I was doing a TV spot I think in 1982. It was FNN that became CNBC. I was doing an interview with Walter Bressert. I gave our forecast that the British pound would fall to par by 1985. The pound was near the $2 level at the time so it was about a 50% drop. The host was shocked. He turned to Walt and asked – “What do you think about that forecast?” Walt and I were good friends. He replied, “I would not bet against his computer.”

Socrates has made so many amazing forecasts far beyond what any human could possibly do because there is an array of variables globally that it just takes a computer to track. It is not a neural net. Those have never succeeded. Even IBM sold off its WATSON when it failed to meet expectations. Why everyone has tried to mimic Socrates have missed the point. What I did was completely different. I coded myself into the system. I taught Socrates HOW TO ANALYZE. I did not throw all the data into a neural net and hope it would figure it out all on its own. AI that is out there may be impressing people, but they are language models. They can search the existing data and retrive the answer.

However, these AI Language Models will never be able to learn how to trade or discover the cure for cancer as IBM thought with WATSON. They are NOT capable of discovery because to discover anything, it takes curiosity and that cannot be coded.

It was the central bank of Lebanon that found data in their basement and asked if we could do a model on their their country. I have told this story often how we entered the data and out came a forecast that their country was going to fall apart in 8 days. I thought there was something wrong with the data. The computer projected a parabolic move I tend to call a Phase Transition. They calmly asked which currency would be better. I said the Swiss franc. The computer was correct and 8 days later the civil war began. That is what opened my eyes to the ability of Socrates to forecast geopolitical events. They saw the capital moving and came to us for the timing. We included their currency in our 1985 World Economic Conference.

I had a client who was one of the biggest shippers in the Middle East. He called one day and asked what gold would tomorrow because Iraq was going to start attacking ships in the Gulf to put economic pressure on Iran. I came to realize that someone ALWAYS knows the inside story ahead of war and begins to move their capital accordingly. The computer tracks the capital flows globally and in forecasting markets, it was also inevitably forecasting war and geopolitical events.

As I have explained many times, gold rallied into 1980 not because of inflation and the dollar, it rose from $480 to $875 on geopolitical events when the Soviet Union invaded Afghanistan to support a fellow Communist government against the rise of insurgents on December 24th, 1979. Gold peaked January 21st, 1980 at $875 cash.

I have paid the price for inventing something that had national security implications. I offered to run any study the CIA wanted. They bluntly told me that they had to own it. I said Socrates was not for sale. To even film the Forecaster, everything had to be proven in order to get insurance to make that movie. It was insured by Lloyds of London against slander and libel. The piece of evidence was an email to a lawyer demanding I turn over the source code in order to allow the company to continue forecasting. They fired 240 employees and stole their pension funds. That is how honorable the government is when they want something.

The SEC even used our research during 911. Just a month after the attacks the SEC sent out a list of stocks to various securities firms around the world looking for information. The list includes stocks of American, United, Continental, Northwest, Southwest and US Airways airlines, as well as Martin, Boeing, Lockheed Martin Corp., AIG, American Express Corp, American International Group, AMR Corporation, Axa SA, Bank of America Corp, Bank of New York Corp, Bank One Corp, Cigna Group, CNA Financial, Carnival Corp, Chubb Group, John Hancock Financial Services, Hercules Inc, L-3 Communications Holdings, Inc., LTV Corporation, Marsh & McLennan Cos. Inc., MetLife, Progressive Corp., General Motors, Raytheon, W.R. Grace, Royal Caribbean Cruises, Ltd., Lone Star Technologies, American Express, the Citigroup Inc. ,Royal & Sun Alliance, Lehman Brothers Holdings, Inc., Vornado Reality Trust, Morgan Stanley, Dean Witter & Co., XL Capital Ltd., and Bear Stearns.

My track record over decades proves beyond a shadow of doubt that Random Walk Theory and Efficient Market Hypothesis are complete bullshit. If they were true, then they would have left me alone and our employees. They did their best to stop the forecasting and to steal my life’s work. I never intended to create something that would be of National Security. Why do you think the House Judiciary Committee would NEVER dare investigate my case with judges committing felonies that would force them to actually take action in the name of justice and the constitution?

They spell Justice differently – Just Us!