Some of my readers have asked me to write a bit more about global cycles, but first, I want to put things in context so we can remove the pseudo-science.
To follow cycles analysis, you need 3 critical conditions:
1. A dose of healthy cynicism.Experts often have preconceived conclusions and fit the data to match them. It’s a bit like planting evidence to catch a suspected criminal.
2. A strong mentality shield. Many experts focus on downswings and ignore upswings.
3. An understanding that sometimes the cost of intellectual analysis is common sense.
No, wait, a 4th condition is essential…
4. A large glass of wine. (Need I say more? : )
Okay, now that we’ve got that behind us… let’s start with a pet peeve of mine: climate cycles.
I’m most cynical about global warming and climate cycles, in part because I grew up hearing that a billion people would freeze to death by 1980.
I certainly don’t ignore the human disrespect for Mother Earth with plastic dumped in oceans, rivers polluted and carbon effects of processed meats.
I also don’t ignore the fact of wildfire incidents… although it seems to me that if humans insist on building homes made of wood and straw and locating them in dense brush areas surrounded by people high on drugs and alcohol who think arson is a giggle, wildfires will increase — regardless of global warming effects.
Oh, and I didn’t fall for the headlines that predicted I’d be living under the ocean in California by 2010 either.
I’m especially cautious about alarmist headlines spawned by documentaries like An Inconvenient Truth because, rather than galvanize action for change, it actually polarizes people into inaction.
Perhaps if the filmmaker had given the $30 million she made to a global warming cause, I might be less cynical about the alarmist ‘evidence’ presented in the documentary.
But alarmist it was…
And it single handedly resulted in billions of dollars of taxpayers money being granted to people and companies willing to fight global warming. (I believe Al Gore might own one or two, but I’m just guessing.)
All the latest data I’ve read suggests we’re actually in a cooling trend right now, so no doubt ‘This too shall pass’ and we’ll all be buying long johns and hot water bottles again.
Even in the height of summer in southern California, my wife still complains of feeling cold. We’ve had a 40-year thermostat war. I think she’ll be alarmed by the latest data, so I’ll probably just need to call the ACH technician again.
The common-sense perspective on climate change is that Earth is said to be 4.543 billion years old, and we’ve been keeping data on things like climate statistics only since 1880.
So when I asked my calculator what percentage of time is 140 years of the Earth’s existence, it laughed at me and then caught fire. I think it just got mad at how dumb we humans can be.
That’s perspective… and time for a swig of wine.
This is the challenge with cycle analysis over a really short period of time. What if we’re in a billion-year cycle?
Who would know?
Financial and Historical Cycles
For this reason, the only realistically reliable cycles are financial and historical, and they’re the ones I like to follow.
I find financial cycle experts to be remarkably consistent… but with disagreements on where a ‘wave’ starts and ends. But if cycles have any merit, then there’s no doubt we’re now in the 4th wave of 5. This would mean that the current crash is not yet the crash, but a deep correction.
If this is true, the markets will turn and quickly hit new highs… then, just as everyone is claiming credit for victory, the 5th downturn hits and we go into depression for 2-3 years.
But do your own research. If you’re in the markets, be sure to time your exit accordingly.
I’m not so sure that an upswing is coming… and because of that I prefer to sit out this current period and watch from the sidelines. It makes me dizzy.
My challenge with financial cycles is whether they can occur irrespective of human greed. Take the current correction as an example…
Two factors are at play:
1. Corporate buybacks which have falsely inflated the stock markets.
2. The insatiable thirst for cheap corporate bonds (in effect selling debt to poorly run companies) which reached $29 trillion globally in February.
These two things alone can cause a prolonged recession and corporate bankruptcies. They’re already occurring and being blamed on Covid-19 (which at the time of writing has caused 1/68 the number of infections that Swine flu caused in 2009).
The virus is a convenient cover up for this irresponsible federal money management. I’m sure if it had not happened something else would be blamed or created and blamed.
This is not just me being cynical…
It’s more than 40 adult years of observation of propaganda.
What gets blamed is rarely to blame…
Or, as one of my closest friends who was a detective for 40 years puts it, ‘If you want to know who committed a crime, look at who benefited from it.’
Historical cycles are eerily accurate. Still, I have a hard time believing that different periods in time can be linked this way because our behavior as societies changes so dramatically.
For sure, they’re great fun to study…, but for me, it’s more entertainment than science (hence, another swig of wine).
When historical, financial and cosmological cycles coincide, my cynicism steps aside and I pay attention as I did on Oct 31 last year.
I noticed a few colliding events, as well as the common-sense observation of Warren Buffet selling millions of finance shares and buying an equal amount of Kroger shares.
Moving from finance to consumer staples is a harbinger of recession.
And since he probably has the best market analysts in the world, I pay close attention.
That really sums up how cycles work for me.
When they collide, I look for real life evidence of boarded strip mall stores, leading investor moves, and newspaper headlines claiming the Dow is on target for 100,000.
Then I get the hell out of dodge until it all passes over.
Smarter people than me trade through it all. If you’re one of those, you have my respect and envy.
Cycle analysis is a fun activity and rather like reading horoscopes, but in the end we have to collate all the information and let our intuition guide us.
And here I am yet again…
Talking about the importance of deepening our intuitions.Cheers,