“Periods When to Make Money” (© 1883)
By Barry Ritholtz - August 18th, 2010, 9:00AM
Yesterday, we looked at Long Term Market Cycles dating back to 1927;
Today, lets have a look at periodicity dating back to 1763. The cycle the (unknown) author posis is a repeating 16/18/20 year
Across the top is the legend “Years in which panics have occurred and will occur again.” The past panic century of dates are 1911, 1927, 1945, 1965, 1981, 1999, 2019. Except for 1981, these were all pretty good years to sell (or short) stocks.
Fun stuff . . .
>
click for giant graphic
Hat tip Corey
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August 18th, 2010 at 9:22 am
Had this chart not been printed the panics would have occurred exactly as predicted but publishing this chart caused the markets to discount the coming panics!
August 18th, 2010 at 9:29 am
Good luck making money in 2019, the world will end in 2012
August 18th, 2010 at 9:30 am
1763 & 1945 marked the end of two wars for the U.S. (well, the forerunner colonies in the first instance.)
The 1911 increment missed the Panic of 1907, when, as Super-Anon said above, the Panic of 1911 was obviously being front-run.
August 18th, 2010 at 9:36 am
Apparently, Mr. Tritch didn’t capitalize on the cyclic predictions in the chart (may have been murdered when an irate customer, who came in looking for a cheap screw, left the store with the complementary chart, and lost everything on his subsequent investment strategy, based on same). His hardware store (chafing dishes, Hot Blast heaters, and pistols) is, apparently, defunct (probably put out of business by WalMart and the Chinese), and he is not among the big names associated with stock gains in the 19th or 20th centuries.
August 18th, 2010 at 9:37 am
A little off-topic –
There’s been a high degree of interest expressed here about HFT, and its possible role in the May “flash-crash” and what the possible implications of HFT might be. For the financial markets — especially stock markets.
I ran across this post, which porvides some fascianting details about trading robots, alogorithms and HFT:
http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829
The charts are provided by firm called Nanex, hq’d in the Midwest:
http://www.nanex.net/FlashCrash/CCircleDay.html
Fascinating stuff — at least for me and thought I’d pass along.
Apologies in adavnce if this groups work has been previously posted and discussed here at TBP — if it was, I missed it.
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August 18th, 2010 at 9:37 am
Looks as good as anything I’ve seen from Ibbotson or any of the big research departments have produced. I mean, all we’re talking about here is predicting the future. What’s so hard about that?
August 18th, 2010 at 10:39 am
Where on earth did you did this up?
August 18th, 2010 at 10:54 am
[...] Omens are for kids. Here’s a tip of the top hat to Barry Ritholtz for unearthing this nineteenth-century great-grand-daddy among technical [...]
August 18th, 2010 at 11:31 am
Nice chart quite impressive work.
but for
Picture/Chart is photo shop case of fake documents and was made in 2010
August 18th, 2010 at 11:51 am
Judging by what else is printed on the document itself, I have my doubts that he meant securities when he used the term “Stocks.”
BTW, happened to flip on CNBC when changing channels and Larry was on with an octobox discussing an apparently recent article by Jeremy “stocks for the long run” Seigel. Appears he doesn’t like that people are ignoring him and buying bonds instead of stocks and is ranting about a bubble. I guess his subscribership is down and he is disappointed in not being able to ruin as many investors as he has in the past. Surprisingly, the consensus was that there isn’t a bubble.
August 18th, 2010 at 1:45 pm
A fluctuation isn’t necessarily a ‘cycle’.
Even a blind pig…
The more things change…
Hmmm, what else could I toss in here?
August 18th, 2010 at 1:51 pm
So, is it a photoshop fake? By “stock” does it mean actual physical goods? Possible answers:
In 1897, “Stone, an Illustrated Magazine”, 25 years after the chart was originally published, reproduced the diagram and offered an explanation. See:
http://books.google.com/books?id=NDEAAAAAMAAJ&pg=PA378&lpg=PA378&dq=george+tritch+cycles&source=bl&ots=Lj4uW25ln5&sig=ecyyti-sbSHPoJYYmW87FJGr8V4&hl=en&ei=MRxsTL7wBYm-sQObqsj_Bw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBIQ6AEwAA#v=onepage&q=george%20tritch%20cycles&f=false
“The diagram which we give above was published on a business card by George Tritch, in Denver, Col., in 1872. We reproduce it from the card, with the explanations given with it. The diagram is not altogether accurate; for example, the panic Tritch predicted for 1891 actually occurred in 1893; still, the year 1891 witnessed the beginnings of the depression and the shrinkage in values which culminated in the crisis of 1893. It will be noted that the diagram gives the year 1897 as the time when an upward movement is to begin, and when it will be wise to buy stocks and real estate. Here Tritch has predicted like an inspired prophet. Everything in the grain, stock, and real estate markets are booming skyward, while the gold discoveries in various quarters, the financial legislation in foreign countries, and the opening up of factories and mills throughout this country indicate that good times have come again, to stay, let us hope, many years beyond the period Tritch sets down for another relapse, viz., 1899-1904.”
August 18th, 2010 at 2:35 pm
How about the 1,000′s of like predictions that were wrong. Its like if you get 128 people to flip coins to come up heads and finally, at the end, one person is left that has done it seven times in a row and you rejoice that you have found someone who knows how to flip heads. I’m sure there is a Latin phrase to describe this faulty thinking. So, thanks Barry, for nothing.
August 18th, 2010 at 3:02 pm
NormanB,
It’s like: “I, James Randi, will die today”.
August 18th, 2010 at 4:27 pm
This is a variant of the Benner cycle which has a long history.
August 18th, 2010 at 5:29 pm
The shorter cycles are also pretty interesting. Sell in 2007 and major low in 2012.
August 18th, 2010 at 5:36 pm
Lord, thanks for the link….
August 18th, 2010 at 6:34 pm
BR…this is kind of a weird thing…For some of us it makes no sense.
?????????????
August 18th, 2010 at 8:52 pm
As the man said – “1999 was a good year to short stocks”.
What?
August 19th, 2010 at 11:17 am
[...] cycle I mentioned yesterday (“Periods When to Make Money” (© 1883) was picked up by FT Alphaville, and caused some consternation in certain circles (where marinating [...]