The
Balenthiran Stock Market Cycle
Article
by Kerry Balenthiran, Author of The
17.6 year stock market cycle
With stock markets around the world at or near all time highs it is
tempting to think that we are in a new stocks bull market. But was 2009
the start of a new secular stocks bull market? Are we really
about to say goodbye to Dow 14,000 forever? How can we tell?
These are the questions that I set out to answer when I started to
study historic stock market cycles. It comes as a surprise to most
people to find out that booms and busts occur surprisingly regularly
and that there is a repeating cycle in the stock
markets.
Just because stock markets are making new highs does not mean we are in
a new long term bull market. In fact during the bear market of 1965 to
1982, the Dow made new all-time highs in 1972 and then promptly fell
45%. So new highs are not necessarily an indication of a new bull
market.
The 17.6 Year Stock Market Cycle
The 17.6 Year
Stock Market Cycle (Dow Jones Industrial Average INDU)
My research has identified the existence of a regular 17.6 year
stockmarket cycle consisting of increments of 2.2 years that correspond
to
major cyclical stock market turning points such as 1929, 1974, 1987,
2000, 2007, 2009 and beyond. I
have called this cycle the
Balenthiran Cycle and that is the subject of my book, The
17.6 Year
Stock Market Cycle: Connecting the Panics Of 1929, 1987, 2000 and 2007,
published by Harriman House.
Balenthiran
Cycle
Balenthiran Cycle: 17.6 Year StockMarket Cycle in 2.2 Year Increments
By studying stock market data going back 100 years I have been able to
extrapolate the cycle forwards to provide a
market roadmap stretching
out to 2053 which outlines the changing character of the stock market
through the different phases of the secular 17.6 year stock market
cycle (secular bear market phases shown above).
Using this cycle I forecast that 2013 is likely to see a significant
stock
market correction that will provide a fantastic opportunity
to
buy into equity markets ahead of the next great bull market.
The current long term bear market in stocks is likely to continue until
2018, but after that we should see another period where equity
investment comes back in vogue and buy and hold rules again, just like
the period from 1982 to 2000.
As major world wide stock markets reach multi-year highs and the media
is full of articles stating that a new bull market is underway, it is
worth remembering that, as we are all aware, stock markets do not go up
in a straight line. Investors tend to forget that big falls occur when
they least expect them.
The tendency to expect outsized
returns to continue, aka greed, means that
people tend to ignore the
warning signs and are unprepared for the inevitable change in trend
that occurs. This happens on the way down as well as up. By
being aware of long term secular cycles as well as the intermediate
cyclical turning points investors will be better equipped to ensure
that they have the right strategy for the prevailing stock market
conditions.
Kerry
Balenthiran
Author, The 17.6 Year Stock Market Cycle:
Connecting the Panics of 1929, 1987, 2000 and 2007, published by
Harriman House
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|
The 17.6
Year Stock Market Cycle
Connecting the Panics of 1929, 1987, 2000 and 2007
By: Kerry Balenthiran
Format(s): Paperback, Ebook
ISBN(s): 9780857192738, 9780857193094
Published: 11 March 2013
Edition: 1st
Publisher: Harriman
House
Available From: Harriman House and Amazon |
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