Boom and bust occurs much more frequently than many imagine and by studying historic stock market cycles we can learn a lot about their likely duration and also what to expect along the way. A cycle doesn?t mean that the same exact thing will happen over and over again. A cycle is a sequence of events that repeat over time. The outcome won't necessarily be the same each time, but the underlying characteristics are the same.
Well known investors such as Warren Buffett and Jim Rogers have written about 17/18 year stock market cycles and numerous analysts have constructed charts showing 18 year bull and bear market cycles. Cycles of approximately 18 years have been documented by many stock market commentators.
Kerry Balenthiran?s research has identified the existence of a 17.6 year stock market cycle. Crucially he has discovered that the cycle consists of increments of 2.2 years that correspond to major cyclical stock market turning points such as 1929, 1987, 2000, 2007 and beyond. He calls this the Balenthiran Cycle.
By studying stock market data going back 100 years Balenthiran has been able to extrapolate his 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 17.6 year stock market cycle. 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.
In this excellent book, Balenthiran describes the background to market cycles, the research he undertook, how his 17.6 year cycle is constructed and the implications of the cycle for investors.