5 replies to this topic

[stocks]

I have no background in finance or economics. Nevertheless, years ago I remember reading that the great financial panics of the 18th century were: 1819,1837,1857,1873,1893. Odd; these were five 18th century years and all 10 were odd numbers, ie 19,37,57,73,93. I then listed all the beginning years of acknowleged panics (later called recessions) in the last two centuries that I could find: 1819 -- 1901 -- 2001 1833 -- 1903 1837 -- 1907 1857 -- 1910 1869 -- 1913 1873 -- 1920 1884 -- 1929 1890 -- 1937 1893 -- 1948 1896 -- 1953 --------1957 ------- 1960 ------- 1969 ------- 1973 ------- 1980 ------- 1981 ------- 1990 Then I grouped them according to the last number of the year. # of recession events starting in years ending with number: 0 - 6 1 - 3 2 - 0 3 - 7 4 - 1 5 - 0 6 - 1 7 - 5 8 - 1 9 - 4 28 recession events Now divide them into favorable and unfavorable years. FAVORABLE YEARS (only 0 or 1 recession event) 2,4,5,6,8 UNFAVORABLE YEARS (18 total recession events in just three years) 0,3,7 I then had calculated a 7% chance that 2 years would have no recession events, and a 1% chance that 18 of the 28 recession events would occur in just 3 years. Next we move to the STOCK MARKET. Understand that Nobel laureate Paul Samuelson once said something to the effect that "the stock market had forecast 9 of the last 5 recessions." Also, note that the stock market crashed in 1987, but there was no recession. The correlation with the economy is not strong. There is a well-known, but controversial 10 year (decennial) pattern in the stock market. The following table is a version of the 10-year stock market DOW cycle from 1881-2004.. (Note that the DOW was down in 2005, but broader market averages like the S&P500 and NYSE Composite were up) ---Year ending in -- 0 -- 1 -- 2 -- 3 -- 4 -- 5 --- 6 -- 7 -- 8 --- 9 ---Up Years ---- -- 4 -- 7 -- 7 -- 6 -- 8 -- 12 -- 7 -- 6 -- 10 -- 9 ---Down Years -- --8 -- 4 -- 6 -- 7 -- 5 --- 0 -- 5 -- 6 --- 2 ---3 DOW % changes 1881-2004 ----Year ending in - 0 --- 1 --- 2 ---- 3 ---- 4 ----- 5 ---- 6 ----- 7 ---- 8 ------- 9 Total % Change** -86% 0% 23% 66% 91% 368% 71% -38% 221% 110% FAVORABLE YEARS (Best % gain years ) 5,8,9 UNFAVORABLE YEARS ( Worst % gain years) 0,7 Now let's combine the years with favorable economic or stock market results -- FAVORABLE 2,4,5,6,8,9 UNFAVORABLE 0,3,7 Here comes the amazing part. Now take these last numbers of the years and consider them as first numbers of decades: FAVORABLE 1920's 1940's 1950's 1960's 1980's 1990's These decades were all good to great decades for the economy. UNFAVORABLE 1900's 1930's 1970's These decades were all very poor to horrible decades for the economy.

[Russ]

That is pretty cool stuff. Nonetheless, we are in a 00's decade and things are OK so far, although it did start with a dot.bomb recession

[Trend-Signals]

Excellent and interesting, thanks

I have no background in finance or economics. Nevertheless, years ago I remember reading that the great financial panics of
the 18th century were: 1819,1837,1857,1873,1893.
Odd; these were five 18th century years and all 10 were odd numbers, ie 19,37,57,73,93.

I then listed all the beginning years of acknowleged panics (later called recessions) in the last two centuries that I could find:


1819 -- 1901 -- 2001
1833 -- 1903
1837 -- 1907
1857 -- 1910
1869 -- 1913
1873 -- 1920
1884 -- 1929
1890 -- 1937
1893 -- 1948
1896 -- 1953
--------1957
------- 1960
------- 1969
------- 1973
------- 1980
------- 1981
------- 1990

Then I grouped them according to the last number of the year.


# of recession events starting in years ending with number:

0 - 6
1 - 3
2 - 0
3 - 7
4 - 1
5 - 0
6 - 1
7 - 5
8 - 1
9 - 4

28 recession events

Now divide them into favorable and unfavorable years.

FAVORABLE YEARS (only 0 or 1 recession event)
2,4,5,6,8


UNFAVORABLE YEARS (18 total recession events in just three years)
0,3,7


I then had calculated a 7% chance that 2 years would have no recession events, and
a 1% chance that 18 of the 28 recession events would occur in just 3 years.


Next we move to the STOCK MARKET. Understand that Nobel laureate Paul Samuelson once said something to the effect that
"the stock market had forecast 9 of the last 5 recessions." Also, note that the stock market crashed in 1987, but there was no recession.
The correlation with the economy is not strong.

There is a well-known, but controversial 10 year (decennial) pattern in the stock market.

The following table is a version of the 10-year stock market DOW cycle from 1881-2004..
(Note that the DOW was down in 2005, but broader market averages like the S&P500 and NYSE Composite were up)


---Year ending in -- 0 -- 1 -- 2 -- 3 -- 4 -- 5 --- 6 -- 7 -- 8 --- 9

---Up Years ---- -- 4 -- 7 -- 7 -- 6 -- 8 -- 12 -- 7 -- 6 -- 10 -- 9
---Down Years -- --8 -- 4 -- 6 -- 7 -- 5 --- 0 -- 5 -- 6 --- 2 ---3


DOW % changes 1881-2004

----Year ending in - 0 --- 1 --- 2 ---- 3 ---- 4 ----- 5 ---- 6 ----- 7 ---- 8 ------- 9
Total % Change** -86% 0% 23% 66% 91% 368% 71% -38% 221% 110%


FAVORABLE YEARS (Best % gain years )
5,8,9

UNFAVORABLE YEARS ( Worst % gain years)
0,7



Now let's combine the years with favorable economic or stock market results --

FAVORABLE
2,4,5,6,8,9

UNFAVORABLE
0,3,7


Here comes the amazing part. Now take these last numbers of the years and consider them as first numbers of decades:

FAVORABLE
1920's
1940's
1950's
1960's
1980's
1990's

These decades were all good to great decades for the economy.



UNFAVORABLE
1900's
1930's
1970's

These decades were all very poor to horrible decades for the economy.

[dcengr]

If you believe in cycles, and that cycles are based on human life span, then panics should occur at mid cycle of lifespan and 1 cycle of lifespan. Thus in your years, you show a panic every 20 years or so. Now its closer to every 35 years or so. I would say the panics tend to alternate. You get a minor panic and a major panic. The minor panics are usually only economic, the major panics are usually economic and results in a major war not too long thereafter. Just a guess but when everyone who's learned the lessons of the old days die off, then you repeat the bigger mistake.. so its tied to human lifespan.

[stocks]

That is pretty cool stuff. Nonetheless, we are in a 00's decade and things are OK so far, although it did start with a dot.bomb recession

Yes. It's getting late for this decade.
The 2010 decade may turn out to be the nightmare decade.

[Russ]

W.D. Gann's cycle analysis "the Master Time Factor" states that the latter half of the 7th year of a decade tends to be extremely negative for the stock market.