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The Next 20 Years

The Next 20 Years. Richard Mogey Foundation for the Study of Cycles. The Foundation for the Study of Cycles. Established in 1941 by economists and physical scientists We have gathered more than 5000 years of economic data

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The Next 20 Years

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  1. The Next 20 Years Richard Mogey Foundation for the Study of Cycles

  2. The Foundation for the Study of Cycles • Established in 1941 by economists and physical scientists • We have gathered more than 5000 years of economic data • Created Cycle Analysis software- Techsignal Software Uses statistical and Fourier methods • Gathers research on interdisciplinary cycle research

  3. Why cycle don’t work • Markets reflect a random walk • You can’t know the future • The past is no guarantee of future performance • So many have made lousy predictions based upon cycles • I just don’t believe in cycles – it can’t be true • You can’t tell me why there are cycles

  4. What are cycles • Cycles are history not magic • People when confronted with similar conditions react in similar ways • History repeats itself but does not duplicate itself • The differences between two cycle occurrences is key not the sameness • Study changes in the data • Observe and experiment • They are reasoning about human behavior

  5. Historical Data the heart of cycle analysis

  6. Cycle Typology • Not all cycles are the equal • Physical Cycles • Natural Cycles • Cycles in Human Activity

  7. A Physical Cycle

  8. Cycle in Human Activity

  9. Data the heart of cycle analysis • Secular Trend • Minor Trend • Secular or Long term Trend • Data Changes • What causes trend in a time series

  10. How we do our analysis • Data gathering • Using our Software – Techsignal with statistical testing • Looking for causes • Looking for relationships • Intermarket cycle analysis • Understanding sameness and difference • Difference is more important than sameness

  11. Major Long Cycles, a Suggestive Review • 1040-year cycle – Cycle in Materialism • 510–year cycle - Cycle in World Hegemony • 234-year cycle – Cycle in Political change • 178-year cycle – Cycle in climatic changes & commodity prices • 60-year cycle – Climate & Master Time factor in economic time series

  12. A Chinese Curse • “May you live in interesting times” • Well we are cursed • You don’t get more interesting than the last 100 years unless it is the next • Things are not always in this much flux

  13. Historical Data the heart of cycle analysis

  14. Major change in political hegemony from West to East

  15. Sunspots and the 178-year cycle

  16. Major cycles Convergingthe 500, 234 and 60-year cycles

  17. Long Cycles in Economics Series • Kondratieff Long Wave 60-year • Half Long Wave 28-30 -year • Kuznets 18.6-year • Value of Money Wave 15.6-year • Juglar 12.5-year • Kitchen 40-month • Shirk 24-month

  18. An Important example of Change • Kondratieff was thought to be an economic wave when the economy was an agrarian economy • It was then thought to be a commodity price wave when we were on a gold standard and inflation was under some restraints • It remains an interest rate wave • It is not a stock market wave

  19. What Kondratieff Saw

  20. What Happened to Kondratieff?

  21. The Kondratieff Wave in Bond Yields

  22. The 60-year cycle in Yields

  23. The Schumpeterian System

  24. Schumpeterian Synthesis

  25. How we use cycles • Our interest is not prediction but rather understanding and anticipation • Cycles are both long and short-term • We use cycles as part of our decision making process and not just for forecasting

  26. All Cycles are related • All cycles are synchronized • All cycles are parts of groups determined by trends • All groups are sequenced Between Groups Within Groups • There are master time factors from Physical life on Earth The Rise and Fall of Civilizations The Economic realities

  27. The 54-year cycle

  28. Yields and the US dollar

  29. Cycle Groups • The cost of money group Yields, short and long • The economic expansion group Equities, economic indicators • The Natural Resource Group Commodities, energy • The value of money group Gold, forex • Cycle Groups can be seen in trends

  30. Yield Group

  31. Economic Expansion Group

  32. Natural Resource Group

  33. Intermarket Cycle Analysis • Integrate Asset Classes Equities, US and International markets Gold and Precious Metals Real Estate Bonds and cash equivalents Energy Commodities and natural resources(non-energy) Forex(not truly an asset) • Determine the Cyclic Context for your asset - Asset Classes that influence your time series the most • Integrate Time frames

  34. Beginning an Intermarket Cycle Analysis • The Cyclic Context is based upon synchronies and sequences • Assets are synchronized • Asset turns are sequenced • The dominance of the 60 year cycle in yields • Capital flows determine the dominant asset class and forex shows the flow of capital

  35. Asset Classes • Equities, domestic and international • Bonds and Fixed Income • Cash Equivalents • Precious metals • Energy – This is typically not an asset class but it is so important it is listed • Commodities, primarily growing commodities • Raw materials and Natural Resources • Fixed Assets such as real estate • Collectibles • Forex

  36. Equities a case study in Intermarket Cycle Analysis • Equities are most dependent upon several asset classes • Leading, coincident and lagging factors • The economy • Long cycles • Intermediate cycles • Short term picture

  37. Important Assets in relation to Equities • 60-year cycle in Yields – Major Economic Readjustment • 15.64-year cycle in the US dollar – marker of economic imbalance • Gold and Commodity Price • Energy Cycles

  38. Cycles in Major Assets • Bonds 60-year and 12-Year cycle • Dollar- 15-year cycle • Gold and Precious Metals – 15–year cycle • Stocks Decennial Pattern, 40 & 24–month cycle • Commodities and Energy 28-year cycle • Real Estate/Fixed Assets – 20-22-Year Cycle

  39. What to look for in Equities • Yields and US dollar These to do not cause the changes in equities but they mark the changes • Gold indicates the soundness of money • We do not need to forecast we need to understand

  40. 60-year cycle in Bonds

  41. 15-year cycle in US dollar

  42. Gold and Equities

  43. Gold and the US dollar

  44. US dollar

  45. Yields and the US dollar

  46. The complexities • 60-year master time factor • Half cycle 28-30 year demand cycle • 15.6-year monetary cycle • 10-year cycle in equities • The Soundness of Money – War and the 60-year cycle in yields

  47. US dollar crises • 1780-82 – Revolution • 1808-1814 – War of 1812 • 1861-64 – Civil War • 1872- Reconstruction 60-year low in yields • 1920 – WWI • 1929-40 – Great Depression – 60-year cycle low in yields • 1940 – WW II • 1968-70 – Viet Nam • 1979 - Inflation • 1990 – 1st Iraq War • 2001-?? – 2nd Iraq War – 60-year cycle low in yields

  48. Civil War Collapse

  49. Great Depression

  50. Current Anomaly

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