Edward R. Dewey, who worked for US President Hoover in the 1930s was a pioneer in the discovery of natures cycles. They affect business, the markets, and so much more.
In the Great Depression, President Hoover asked Edward Dewey, who at the time was the Chief Economic Analyst at the Department of Commerce, to figure out why the US continually experienced economic booms and busts. In the 1800s and early 1900s, there were eight economic downturns of varying degrees.
Dewey devoted the rest of his life to uncovering and understanding cycles.
He found that the Canadian Lynx followed an abundance pattern of exactly 9.6 years. For over two hundred years, they’ve prospered and then died off in a regular rhythm. The coyote, red fox, fisher, marten, wolf, mink, and skunk have the same abundance patterns.
The chinch bug, which frequents much of the US Midwest, has a similar pattern—at its height swelling to as much as 70 million per acre down to just 1600 per square foot at the bottom.
The lemming, that little six inch rodent found in Norway, has a 3.86 year life pattern. Every 3.86 years, they come down from the hills, destroy everything in site and don’t stop when they gets to the sea. .. and end up drowning. A few who remain behind for some unknown reason start up the next herd which, right on schedule, heads to the sea all over again.
What creates these cycles that seem apparent in every living thing?
Professor Frank Brown at Northwestern University tried an experiment with oysters. These oysters would open their valves in sync with the changing tides, in other words with the moon, as they lay in along the Connecticut seashore.
He gathered up a bunch of them and took them to his lab in Illinois, almost 1000 miles away. He kept them in salt water in covered containers in the dark and for a few days, they continued their usual routine. But two weeks later, they were opening and closing their valves to the rhythm of the moon in Illinois!
Sunspot activity also moves in cycles—11.2 years. Alexander Chizhevsky, a Russian scientist, studied the statistics and histories of seventy-two countries and found a Human Excitability Factor that coincides with the solar peaks. Wars, revolutions, airplane crashes, migrations, and other major events tend to happen with maximum sunspot activity.
Here’s an example of the cycle peak around 2001. You can see that the toppling of the World Trade Center in New York took place at a sunspot spike right at the top of that cycle.
There’s an eighteen and a half year cycle in real estate. This one’s quite well known and influences both activity and prices. We’re experiencing a peak right now around the world, and expecting a crash very soon with a bottom about 2020.
The real estate cycle coincides with the lunar nodal cycle, a period of 18.6 years in which for half of that time the moon is below the equator as it revolves around the Earth and above it for the rest. It’s also a rainfall and drought cycle—9 years of each.
Farmers all over the world certainly know about cycles in both climate and in crop growth. There’s a 3.5 year corn cycle, a 9.6 year wheat cycle, a 17.5 year cotton cycle and it goes on and on.
Cycles are a major factor in the movement of the stock market. Successful traders all over the world use cycles as their main means of timing the market. Cycles tell them when to go long or short. Andy Pancholi of London, England has been studying cycles for over thirty years. He publishes a monthly report on cycle turn dates for traders in a wide range of assets, from currencies to commodities to stocks.
He generally focuses on one or two major cycle turns each month. Here’s a chart of the SP500 for the past year and a half, perhaps the most watched US stock index. During this period, his cycle turn predictions have had only one miss. That shows both the accuracy of his projections and validates the fact that stock markets are influenced in a huge way by cycles.
Because human beings control the ups and downs of the market, this strongly suggests that our mood is influenced by forces beyond our control.
Cycles are in virtually everything. They affect wildlife, agriculture, the business environment, wars, our health and much more.
As Lee Iacocca, the past CEO and chairman of Chrysler once said, “Life is full of cycles. You’d better understand them, because all of your timing and often your luck is tied up in them.”
Cycles are fascinating. They determine your future. And they’re the reason history repeats. If you know the past, you’ll better be able to predict the future.
