I was looking at some longer term charts the other day and found a remarkably clear pattern (I was working with the SnP).

If you would like, please share your thoughts on whether or not you see the pattern the way I do / if at all.

The pattern I see, that has been like clockwork since the 70s is: a 6-8 year bull market followed by a 1.5 year bear market.

Some recent markets of note:
1. the tech boom and the crash of 2000
2. the near perfect retrace and the crash of '08.

We are just now comping up on 6 years from the late '08 early '09 lows.

(We have a steep and narrow channel with nothing more than a 10% correction since the '08/'09 lows.)

Also of note is the divergence between equities and commodities, most notably oil.

There seems to be a pattern of this kind in the whole history of the stock market, not only the last 2 crashs.
There's a guy called Martin Armstrong who constructed a mathematical model that uses historic data to predict the evolvement of the stock market.
Apparently he predicted the last 2 crashs pretty much to the exact day, several months before it happened.
They made a pretty interesting(in my view) documentation about him called "The forecaster". It's a little bit slow but has a lot of exciting information.

He forecasted another huge crash for November 2015 because of the fail of the Chinese stock market, which kind of happened, but didn't really lead to the consequences he assumed.

Amongst other things, he was locked up by the FBI for several years because he wouldn't give up his forecasting model to them. Whole story probably has to be taken with a grain of salt, but sick if true.

its called an economic cycle and yeah those are roughly the right time frames.

Only reason why I think this time could be different and push out the next recession is due to the financial crisis being so severe. read ray dalio's a beautiful deleveraging from a few years back as he explains the cycle is longer coming out of a financial crisis.

That is interesting. I will definitely check out Dalio's work. I like him.

It makes sense that it would be longer. But the oil market is on fire right now. I don't think stuff like Tesla and Solar City are causing prices to go this slow. Sure they may contributing, but I think there is more going on here.

Maurice, I am also familiar with Armstrong. But more so because I know he likes gold. I was aware he worked with cycles but didn't know his time frames matched mine.

It seems like the buy and holders have 0-2 years to get out or get fleeced.

Can't we just continue to buy every month......buy on the way down and the way back up? Seems like the most +EV route for 99% of people on this forum. (myself included)

Isn't it commonly accepted that the reason why oil has plummeted like this is because OPEC wanted to crush the American oil producers?

(I legit don't know, it's just how all the oil guys I play poker with talk...I've had my head way too far up real estate to pay attention to oil tbh)

yes. oil demand actually grew at the quickest rate in many years this year. id be worried about the read through if demand dropped but we're seeing the exact opposite

I think it is commonly accepted as a contributing factor. But it could certainly be more complicated than just simply that.

For instance, if you had a **** ton of oil underground in your back yard and saw technology on the horizon that would make it rather worthless, wouldn't you initiate a fire sale now? Sell as much as you could regardless of price...

I bet you the House of Saud does not Elon Musk laud.

Also, supply and demand rule the decade perhaps, but not the day. Take the crash of '08 for example. It wasn't like demand evaporated all of a sudden. Sure demand would decrease with an economic slow down.

But a lot of it is profit taking, stop runs, and the mechanics of trading.

Honestly, my inclination is to say you are ****ed. They have turned the idea of investing into one of gambling.

The financial markets are the world's biggest casino now. Casino's only offer games with a house advantage... Sometimes the only way to win a rigged game is not to play.

Can you expand more on this? Your saying investing long term while dca is not +ev?

you might be about "right now", interpreting that very narrowly.

BUT... the stock market is up 13% or so per annum the last 6 years with no down years (total return)... for all the "damage" done, you could have just owned the SPY and not worried too much

there's no theoretical reason that the stock market should follow the economic cycle, especially if this is all "expected" and well-understood anyway as your post seems to imply.

So your claim is DCA into an index fund (VTI for example) over the long haul is not a +EV investment anymore?

(if that's your position, I STRONGLY disagree)

That is pretty much exactly my point.

And here is an oversimplification for you. Imagine a world with two assets, cars and shoes. There are 100 cars in the world and 1,000 pairs of shoes.

What is the price of one car? Now, everything is the same, but there are now 10,000 pairs of shoes. What is the price of one car?

Translate to the real world with USD (or currency in general) and the stock market...

I am not so sure I would say its neutral to minus EV. IDK. It is a tricky question. But I can say with certainty that it is not optimal.

If you don't understand the stock market than perhaps you should not be investing there. Stocks are not the only game in town. Speaking for American FAs, they are 99.9% clueless. They are relationship managers and networkers. They add < 0 value to your portfolio and often their firms are on the other side of the trade.

I can say with confidence that the models they don't understand are super fundamentally flawed. US paper is not risk free. The derivatives market is a ticking time tomb.

And, most importantly of all, interest rates are ass backwards by definition. I mean seriously, I don't understand how the entire business world is not revolting on account of this (lol wait, nvm, I do...free money).

But seriously, markets are built on supply and demand. The "equilibrium point" between these two opposing forces yields price. The cost of money through time is the interest rate.

Now of course there is a supply of US paper. The government would be immediately bankrupt if they could not keep borrowing. But, on the flip side, there is no real demand. The Federal Reserve does not represent actual demand for US paper. They don't participate in the real economy. It is simply a journal entry.

This means that money is fundamentally, and by definition, miss-priced through time. So investment decisions are ****ed because their unit of account is ****ed.

It can't and won't go on in definitely. So far all that is happening is that the can is being kicked. But just like in NL, going all in as a bluff works every time, except the time it deson't...

The last time something like this happened we came off the gold standard and gave our closest allies of all time the finger.

As for LIBOR, they literally just made that **** up for years. I mean mortgage rates, CC rates, etc are all determined by things like the Fed funds rate and LIBOR.

It is all a joke, it is smoke and mirrors... So you can funnel 10% of your pay check blindly into the market if you so wish. You can continue hoping that a gust of wind doesn't knock down the entire house of cards if you so wish.

But, were I you I would not buy and hold. Buy and hold is kind of like chasing every draw in poker (like stay in there until the river, you never know, that gut shot just might get there). There are good draws and there are bad ones. It depends on the pot odds or the price vs your risk. Investing is no different than poker.

No, I don't think I would go so far as to say that, IDK. But just because it is (or may be) + EV doesn't mean its the move. You have to consider the opportunity cost of your capital.

I will say that buy and hold, if you are buying at these prices, its not + EV.

Let's say your net worth is $500k. Let's say I am going to bet you on a coin flip and will lay you $501k to win your $500k. Would you take the bet? It is plus EV in the long run...

Some people would, most wouldn't. IMO, that is what buy and hold at these prices is like. You are picking up pennies in front of a bull-dozer.


Think about it, who perpetuates buy hold? ... The investment community. The wise guys get off at the top and back on at the bottom. But they can only do this with a perpetual bid.

Someone has to be left holding the bag. Look around the table, can you spot any fish? No? Then it is likely you...

I don't think the investment community promotes buy and hold. The investment community promotes market timing and the idea that they, and only they, are smart enough to know when to get in and get out. They make a hell of lot more money churning an account then someone who never sells.

You are saying this market is undoubtedly is going down, and soon. How soon, I ask? Give me a date that everyone should go to cash, so I can track your prediction.

Here's the problem, people on this forum have been predicting a collapse since 2010. If I had listened to them, I would have been in cash for the last 5 years, waiting for my entrance point and missing out on a pretty good bull market.

I'd say the investment community wants people in high expense ratio actively managed mutual funds and/or trading options and/or actively churning their account, etc. etc.

Lets take a typical "Rika Investment".....bought 100 shares of VTI in 2010 for $6,400ish. Bought through wells trade (wells fargo) because I get 100 free trades a year, so no commission. Did have to pay the spread, but at least it's a vanguard ETF so super low expenses. (and since I bought while the market was open, and VTI being so liquid, lets be honest, the spread was super tiny anyways)

So how did/does/is the investment community ripping off "that" investment of mine? (I'd argue it isn't)

Depends on how much someone values their shoes compared to a car. It's possible you can get 2 cars for 1 pair of shoes.

I don't spend enough time in this forum to know who is a clown and who isn't just by name recognition, but Rand seems pretty clownish to me here. I assume I could go through his posts and find a track record of sky-falling predictions, just because of the verbiage he uses and his un-cited and unsubstantiated style of prognostication.

I impugn the premise of a predictable cycle of bull and bear markets from 1970. Just look at the graph of the DJIA or S&P and imagine when you would get out and back in. Say you were lucky enough to get in at the bottom in 1987 after that correction, then you wait six years or eight years (let's say seven) and sell in 1994. Let me know how that worked out with you waiting on the sidelines while the market more that tripled. Even if you again miraculously got in at the absolute bottom after the next crash (in 2002) you'd have still lost out on a near double in that time.

Or let's say you buy at the bottom in 2002 and wait seven years. Now you've actually lost money because the next crash happened fairly quickly. Of course if you can look back at the graph and decide if you hold six or eight years, it's easy to cherry pick, but in reality, the difference six or eight years is more than the span of the entire bear market (according to your 1.5-year bear market premise).

Anyone who is on board with Rand just on the basis of this thread would do themselves a favor by reading Fooled by Randomness. It's an amusing coincidence that Fooled by Randomness begins with Fooled by Rand.

Rand is clearly wrong and not worth arguing with. He will be forever broke and blaming others. In the marketplace of ideas he cannot compete.

No one is fooled by Rand.