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Some folks insist on waiting for Easter to mark the beginning of spring, but the season “officially” began last week with the vernal equinox — when the sun passes the celestial equator making its way into the northern hemisphere and making our days become longer and hotter.
Since I live in South Florida year-round, I always look forward to this particular change of seasons because it means the snowbirds will soon fly north again, making my commute easier. Even better, opening day for the Miami Marlins is just around the corner. Hope truly does spring eternal!
The rhythmic changing of the seasons perfectly represents the many cycles that exist in nature, influencing human behavior, the rise and fall of markets, and even civilizations over the ages.
No one better understood, or was more passionate about, cycles than Larry Edelson. When I first met Larry in 2002, I was already a veteran of financial markets with nearly 15 years’ experience as a broker, analyst, trader, and registered investment adviser for high net-worth private clients. But I knew next to nothing about cycles.
Fortunately, I had Larry as a mentor who took me under his wing and taught me everything he knew about cycle research, historical pattern recognition and his own unique style of technical analysis.
Cycles have a sine wave appearance and exist everywhere in nature, and in markets.
Larry was fond of saying: “Cycles exist everywhere … they are in nature, the change of seasons, the tides of the ocean, in human behavior, politics, and yes, in financial markets.”
You must know where you are in terms of the big macroeconomic cycles to correctly determine whether the market tide is rising or falling and whether you should be playing offense or defense with your money.
Also, you must understand how various cycles interact, converge or diverge with one another: The K-Wave, the Juglar cycle, the business cycle and so on. Larry spent a lifetime perfecting his cycle analysis techniques. And he devoted the last three years of his life to quantifying his work by creating a unique, artificial-intelligence cycles-analysis model, Larry’s crowning achievement.
So where are we now in terms of the big-picture cycles?
Many years ago, Larry correctly identified that we are now in the downslope of the K-Wave, also called the Kondratiev cycle, a big cycle that affects everything. The downswing of the K-wave is characterized by financial panics, banking crises, recessions, and even depressions.
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That is the period we are in now, and it lasts until 2025. It’s no coincidence then that the K-Wave peaked exactly on target in 2007, just in time for the global financial system to implode. That crisis has passed for now, but you can bet there are more to come in the years ahead. In fact, all the major economic cycles point lower into the next decade; a supercycle convergence of historic proportions.
But the result of this convergence may not be what you think. In fact, during turbulent periods like this, markets often behave exactly the opposite of what you might expect. In order to understand what is happening now, and in the years ahead, you can’t rely on the old rules of thumb.
The game is changing, and to preserve your wealth and profit, your investing must change too.
Consider …
Many investors believe that stocks must fall as interest rates rise. But that’s pure baloney. Look, the Fed has raised rates three times since December 2015, yet stocks are up nearly 15% since the first rate hike. I’ll get into more detail about the stock market-interest rate myth next week.
Cycle Analysis is the first pillar of Larry’s cycles-based strategy. Stay tuned for pillar 2 (Historical Analysis) and pillar 3 (Technical Analysis) coming soon.
Good investing,
Mike Burnick
P.S. What Wall Street insiders don’t want you to know: Why the U.S. stock market is slated for sudden destruction – but only AFTER it spins off two massive fortunes for investors who make the right moves now: Read more here …
Mike Burnick, with 30 years of professional investment experience, is the Executive Director for The Edelson Institute, where he is the editor of Real Wealth Report, Gold Mining Millionaire, and E-Wave Trader. Mike has been a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. He also served as Director of Research for Weiss Capital Management, where he assisted with trading and asset-allocation responsibilities for a $5 million ETF portfolio.
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The US stock market is NOT going up when there is global financial disaster…. what you are saying is not logical. Like 2000 and 2007, we are going to see a significant stock market sell off/crash.. unfortunately, the 2017 sell off will make both of the previous 2 I mentioned seem like a picnic. The Dow will go to 4000K. The rally from 2009 was fueled by Fed fake money… it’s going to end badly.
@Fred. Pls advice what analysis you’re using to predict that the Dow drops to 4000K? Time frame?
What do you mean with 4000K.? = 4000 ? or 4000,000 ? = 4 million.
Either figure does not make much sense.
Where are we as far as Gold and miners and stocks in general ? Short term .
Thank you, Paul
Please provide some 3 to 5 year charts as per AI.
Thanks.
Morris
Looks like the cycles haven’t been to accurate because gold give it and then takes it away when your cycles claims they’ll ramp up. There is less gains in gold and silver for 2017 then stocks yet your cycles keep saying a correction in the DOW is coming and gold and silver will be record breaking? DOW went up 150 points yesterday? Why invest in the metals when they don’t even go up when metal prices rise? And there is quite a number of people yelling manipulation by the central banks buying huge volumes and selling too – to keep prices low. If this is true how can the metals ever get to the levels you claim they will?
Big buyers of gold like China are demanding physical delivery of gold when central banks dump gold to drive down prices to prevent a breakout. They will eventually run out of gold and there won’t be enough buyers of paper gold left to hold gold prices down. Moreover, central banks can’t drive gold prices below operating costs of miners or they will lessen the supply which will put upward pressure on gold prices. This is why gold is in a sideways pattern for now and probably will not go below 11,000 per oz and if it does it will be short lived. A breakout in gold will come but the central banks can play this game for some time to come. I think we will not see the massive upside in gold prices until bond prices drop significantly and the cost of borrowing by sovereign nations goes to levels they can no longer afford. I think Larry’s long term forecast on gold and miners is correct but I don’t think his models can predict precisely when is the best time to buy in.
Would be nice to actually see the cycle charts Larry used to provide subscribers.
I am a subscriber to Real Wealth. Is there anyway you can make you cycle charts available to members on a weekly basis?
Yes, I agree. It helps to be ahead of the ‘game’.
The fact that the Fed is continuing to raise rates may be taken by investors as a sign that the economy is doing fine. This contributes to the optimism in the markets. When investors realize that the Fed is only raising rates so that they can lower them to combat the next recession, the markets will very likely turn south. Cycles in action.
…but the next recession – like ALL recession – are created by the fed inverting the yield curve. so this whole cycle – like ALL cycles – is controlled by the fed. i’d say the fed has a good plan.
As far as I know, we currently have only 3 open trades deploying 15% of assets for investment. That leaves 85% in cash.
You talk about China being a good place to invest but never make a recommendation.
Am I missing something? Are we waiting for a correction to buy?
Please explain strategy.
Thanks W
I believe in market cycles and, yes, there is money to be made in a bad market. Eventually EVERYTHING goes down EXCEPT inverse ETFs. People will sell their gold shares to have something left. Physical gold will do better. So we all must be diligent since algos will sell regardless of what history has shown.
I, too, would like to know when silver/gold peaks. What say your AI models?
how’s this for a cycle:
bulls markets are born on pessimism, grow on skepticism, mature on optimism, die on euphoria.
we are now entering the optimistic phase, where investors will become hopeful. followed by the euphoric phase, where the fed shuts ‘er down with a yield curve inversion.
According to Larry’s AI GOLD peaks around 4/12/2017 until 4/20/2017. Then down, then slowly up around 4/25/2017 into 5/1/2017. On 5/10/2017 a sharp drop. Please reconfirm that the AI in yr professional opinion remains unchanged? Thanks.
The “cycle” to watch for here, …and comes every year is: “Sell in May….and go Away”.
Works for most years.
US government always can print more money until the $ crashes. Therefore, government will not run out off money unlike what you described.
First of all, did Larry Edelson die? It sounds like you are using past tense using his opinions and theories….
I do not think it intelligent or prudent to invest money based on opinion or theory and at best, it is a gamble to invest in the market just as it is at a table in LV. Don’t believe that; look at charts on how much ( money on margin ) totals the percent of dollars invested in todays market!
Yes, He passed on early in March