Monday, November 11, 2013
The long cycles
The longest cycle most cycle advocates follow is the K-Wave (about 60 years) which last bottomed in 1949 (according to most cyclists). The 2 cycles contained in the K-Wave are often referred to as Super Cycles and are about 32 years in length (Last bottom 1982). Each Super cycle contains 2 Kuznet cycles (about 16 years in length - last bottom around 1998. Then there is the Juglar cycle (about 8 years in length) and finally the Kitchin cycles (2 in a Juglar cycle) which we often refer to. Here is a visual:
As you can see these long cycles are set to bottom in 2014 or 2015. Not all will bottom at the same time as depicted, but 2014 and 2015 may be a period like 1929 for the history books.
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I think it is fair to argue that the money printing of the Fed (and other world central banks) has delayed the current grand cycle from being reflected in most asset classes - including equities.
ReplyDeleteAnyway, a few extra years won't make much difference. The underlying cycles should reassert themselves...eventually.
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Always good to see a clear reminder of the giant cycles we are living within. Great chart.
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*thanks for adding me.
The argument I have seen (so far) the FED programs have delayed the deflationary effects of a Kwave bottom by about 2 years.
ReplyDeleteNot sure though how effective continued QE will be as the velocity of money contracts (corporations are building war chests instead of investing and squeezing more from less).
"but 2014 and 2015 may be a period like 1929 for the history books. "......like 1929 or 1949 ?
ReplyDeleteThanks
We were able to ride all over Balboa Park and around downtown in our 2 hours. The motor assist is awesome. Would totally do this again! electric bikes nz
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