Business Cycle Buy & Hold Strategy

[malyla]

I thought it might be a good to start a discussion about this position trade strategy. It is based on the 8.6 year Business Cycle developed by Martin Armstrong at Princeton Economics princetoneconomics.blogspot.com/2006/06/86-year-review.html

He had a little problem with the CIA which he pleaded out and is now serving time for fraud http://en.wikipedia.org/wiki/Martin_A._Armstrong This info has been modified since last I looked at it

His cycle seems to follow the stock market fairly well, but some say that this is the case due to data mining after the fact. (Can't find the post where this was discussed - will post when I find it)

I back tested the method and it provides an amazing return over a 17 year period. The excel spreadsheet can be found here http://www.tsptalk.com/mb/showpost.php?p=171093&postcount=112. It shows an amazing ability to safeguard your investment in a bear market.

alevin has another method that may verify/support this strategy and I will post first in her thread and then here any findings in support of the BCBH postion strategy.

I'm starting a tracker for this strategy.

That's it for now. Good luck out there.

 

[malyla]

Patiently waiting for June 2011 (the end of this bear market) to move into stocks. Bonds are doing well again (positive return ytd).

Just waiting....... But TSP is safe (Baring a worldwide financial collapse).

Oh so bored..... time to look at ETF trading in my personnal account. I've got to put some of this market knowledge to work while I wait for the Bear to get sleepy again. See you at ETFTALK.

 

[malyla]

Here is the 'latest' from Armstrong. He wrote it in prison.

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

I am a little perplexed with the March 2008 - March 2009 prediction of an upswing in stocks as this did not happen, however, I also recognize that the excessive government intervention and unbelievable bank leveraging may just have caused an anomalous element to be present which does not follow his theory. I am still reading his paper to determine if this biz-cycle theory may still be valid. Page 22-27 are very interesting (gets to the point finally - "Europe knows all about cancelling currencies").

 

[Steadygain]

Here is the 'latest' from Armstrong. He wrote it in prison.

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

I am still reading his paper to determine if this biz-cycle theory may still be valid.

This was a fantastic read and there is no doubt The Biz-Cycle Theory is well validated by the most brilliant and financially gifted minded individuals to live.

This is the main reason why High Risk should dominate from the bottom to the top and Safety should dominate from top to bottom.

Thanks so much for sharing this.

 

[Birchtree]

This article is also pertinent: http://safehaven.com/article-13145.htm

 

[Steadygain]

This article is also pertinent: http://safehaven.com/article-13145.htm

Thus, as the shadow banking system continues to collapse, velocity should move well below its mean, greatly impairing the efficacy of monetary policy. This means that M2 growth will not necessarily be transferred into higher GDP. For example, in Q4 of 2008 annualized GDP fell 5.8% while M2 expanded by 15.7%. The same pattern appears likely in Q1 of this year.


I see this quote as the most fundamental KEY to understanding the overall picture - but a lot of info to digest. Looking at the nuts and bolts undoubted forces us to recognize many complicated pieces.

Still the cylinical waves - dominate everything

 

[malyla]

This article is also pertinent: http://safehaven.com/article-13145.htm

Thanks Birchtree.
"In the U.S. from 1874-94 and 1928-41, Treasury bonds returned 0.9% and 7% per annum, respectively, more than common stocks. In Japan's recession from 1988-2008, Treasury bond returns exceeded those on common stocks by an even greater 8.4%. Thus, historically, risk taking has not been rewarded in deflation. The premier investment asset has been the long government bond" from http://safehaven.com/article-13145.htm

The back testing I did following the method of going into safety (F fund) during recessions (recessions are economic downturns as defined by Armstrong's 8.6 Business Cycle) is surported by this article on deflationary pressures in economic downturns. The link of deflationary GDP to the National debt was eye-opening. Thanks again.

 

[malyla]

Here is the 'latest' from Armstrong. He wrote it in prison.

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

Page 22-27 are very interesting (gets to the point finally - "Europe knows all about cancelling currencies").

Armstrong did mention this current uptrend with an ending date of April 16, 2009. That makes this a very interesting week - will we get above the high of last week(4/17/09)?
According to Armstrong, there should be another uptrend at the end of 2009 and late summer 2010 before the bottom in June 2011 and the resumption of a bull market (page 26). I will follow this with interest.

 

[malyla]

This is the main reason why High Risk should dominate from the bottom to the top and Safety should dominate from top to bottom.

Thanks so much for sharing this.

Interesting way to put tsp investing. Thanks and you are welcome

 

[malyla]

Now here is the latest from Martin Armstrong http://fofoa.blogspot.com/2009/04/martin-armstrong-on-goldman-sachs.html

Not about the business cycle but his take on the Goldman-Sachs conspiracy(dated April 9, 2009)

FWIW

A pdf can be found here http://www.scribd.com/doc/14227076/Behind-the-Curtain4909

with a followup article(pdf) here http://www.scribd.com/doc/14268132/Financial-Panics-Political-Change

You will need to signin to download the pdf but you can read it without signing in.

Armstrong certainly has a lot to say.....

 

[malyla]

There is a MoneyWeek online article this week about Martin Armstrong here
http://economicedge.blogspot.com/2009/04/martin-armstrong-moneyweek-article.html

You can also get the pdf articles from this blogspot without signing in.

The SEC has agreed to look at Armstrong's case. Lets hope he doesn't have any accidents before he gets his review.

 

[Steadygain]

There is a MoneyWeek online article this week about Martin Armstrong here
http://economicedge.blogspot.com/2009/04/martin-armstrong-moneyweek-article.html

You can also get the pdf articles from this blogspot without signing in.

The SEC has agreed to look at Armstrong's case. Lets hope he doesn't have any accidents before he gets his review.

Malyla,
I'm just closing up - so will come back tomorrow to catch up.

There are 3 (only 3) that stood out to me as TRUE GENIUSES

1. Paul Krugman - winner of 2008 Noble Prize in Economics

2. Adam Hamilton - only discovered him within the week (from Lady)
He is the one that convinced me we hit the BOTTOM

3. Martin Armstrong - today from you. I saved his PDF earlier and will come back to this stuff tomorrow.

It is very rare someone screams out to me as being a Genius, but when they do I lose myself and thoroughly enjoy it.

Thank you !!! and have a wonderful night.

Steady

 

[malyla]

Here is the 'latest' from Armstrong. He wrote it in prison.

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

Page 22-27 are very interesting (gets to the point finally about his cycle theory- "Europe knows all about cancelling currencies. Americans do not").

Well, I finished his treatise and have one outstanding thought - There is brillance here but he will need to reorganize this paper in a more scholaly manner to get the attention it deserves.

As I have previously mentioned, pages 22-27 are very good in their explaination of his economic confidence model. Of note are pages 39-55 which is a good primer to the modern economy with reasons why it's good to have derivatives, etc... (AIG is mentioned). Also of note are pages 69-77 which talk about his solution to this financial mess the world is in. All three of these sections had some good surprises and some ideas I have seen on other blogs (independent or co-influenced?). I did have a little problem with the ranting (sounds like justifiable ranting, but why would our system allow this kept popping up while I read it) in pages 56-68 although the account of his meetings and interviews about manipulations were of concern to me if true. His account of how he made a thinking computer that self destructed when seized by the CIA leaves me perplexed as this would take a software genus and why would the US waste that resource???

I do not know how many of you out there have read Issac Asimov's Foundation series, but Armstrong would fit right into that galaxy. In that series, a mathamatical model called psychohistory was developed to predict human behavior and the rise and fall of empires on a large scale. A very good series of books. Maybe Armstrong is our reallife Hari Seldon?

Waiting to see if something in the economy peaks in Jan 2010 and Aug 2010 to validate this model. If the market closes this week higher than last week, does that invalidate the April 16, 2009 peak or has something else (other that the stock market) peaked on that date (currency, housing, oil, etc...)?

Life is interesting.

 

[Steadygain]

Issac Asimov's Foundation series

Oh Malyla - I don't have the time or energy to fall in love ...

Science Fiction is like everything to me


So I'll tell you something I've never told anyone before...

My greatest endeavor - my dream of all dreams - is to create something that essentially attaches our brains. Something that connects the rhythms and waves - the chemical reactions and everything - so when we do connect there are no boundries or awkwardness or anything remotely impairing our union and ultimately our communication.

..... Fast foward a few years.... then when you and I put our helmets on - even though we're miles and miles apart and have never seen each other - with our helmets on we actually feel the emotions and experience the excitement when taking about this stuff...

now to me - that would be the ultimate.

 

[malyla]

So I'll tell you something I've never told anyone before...

My greatest endeavor - my dream of all dreams - is to create something that essentially attaches our brains. Something that connects the rhythms and waves - the chemical reactions and everything - so when we do connect there are no boundries or awkwardness or anything remotely impairing our union and ultimately our communication.

..... Fast foward a few years.... then when you and I put our helmets on - even though we're miles and miles apart and have never seen each other - with our helmets on we actually feel the emotions and experience the excitement when taking about this stuff...

now to me - that would be the ultimate.

Eeeww - no offense SG, but that is the last thing I would want. I have enough issues just dealing with my own thoughts and emotions. I will remain a luddite in that area of technological advancement thankyou very much.:cheesy:

I think April 16/17 is going to hold as a peak. Waiting in F for 4th quarter 2009 and the peak in Jan 2010. Business Cycle is getting interesting....

 

[Steadygain]

Eeeww - no offense SG, but that is the last thing I would want. I have enough issues just dealing with my own thoughts and emotions. I will remain a luddite in that area of technological advancement thankyou very much.:cheesy:

No offense taken whatsoever !

There's no way you could be a luddite in the general sense - and have a love for SF. For SF writers often form the seeds that later bloom into real discoveries.

As this technological advancement is pretty much what my life is all about ... I'd like to expand on this in my Groove and Trip Pad. Somehow I think bringing all the features of my 'dream of dreams' would convince you it's way better than you could imagine.

I think April 16/17 is going to hold as a peak. Waiting in F for 4th quarter 2009 and the peak in Jan 2010. Business Cycle is getting interesting....

Well - here on the 'Business Cycle Buy & Hold' - I'd like to reflect more specifically on Armstrong and I'll tell ya what I think.

As for waiting in F till the 4th Q ... I think that's absolutely Brillant if you're expecting the WORST DAMAGE to follow through the rest of the year.

Given what has happened since last month's low, however, I think there is a high probability that a BULL TREND will dominate the remainer of this year and in fact all the more the next few years.

So I'll go High Risk on 5/1 and stay there. :embarrest:

 

[Steadygain]

Here is the 'latest' from Armstrong. He wrote it in prison.

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

I am still reading his paper to determine if this biz-cycle theory may still be valid. Page 22-27 are very interesting (gets to the point finally - "Europe knows all about cancelling currencies").

With a quick review - and all the more with the sense he truly is a Financial Genius - there is no doubt his biz-cycle theory has a high degree of validity.

I personally don't see this as very different from Kress Cylces (and others who have identified cycles or Waves).

What I particularly like about Armstrong's Theory - is how he precisely IDENTIFIES POLITICAL and MONETARY CHANGES which in turn act as the catylist by which these cycles are formed.

I will have to read more closely the entire paper - along with his other works to really form an opinion. I will say briefly that it is highly possible that the entire Economic Peroid he's elaborated on simply reflects our Global Evolving Economy and the changes that evolve over time - different stages - like a baby to infant to child to teen to young adult - to adult.

At this point I'm still under the persuation that most of these waves or cycles are way more NATURAL and 'the Political Realm' and for that matter 'monetary changes' are more a consequence of an ever expanding Global Network.

As for the Cycles themselves - especially in light of the remarkable similaries they've repeated had - it would be next to impossible to not think the pattern would be highly predictablle and to the Greatest Extent it is. He is talking about how we are headed towards a One World Currency - and the inevitable course of the future. But his pattern of our Current Cycle (and the upswing of 3/08-3/09) - when matched against the background of 224 yrs is still remarkably accurate. He is only off by 1 year. The upswing is likely taking place (but time will tell) as I can't completely rule out a 'Bear Rally'.

I believe the most accurate way to determine our current financial situation is by dealing with what is presently at hand and weighing these against all other historical records that are similar to our present condition.

Most of his refections are undeniable FACTS and the subsequent changes by which the Financial Global Network was created. The regularity of cycles (trends - waves) all seem to reflect the Expansion - Crisis - Contraction that occurs over and over wheather you want to blame GOLD or whatever.

I think he may put a little too much emphasis on GOLD and overlook what appears to be HUMAN NATURE'S INEVITABLE TREND - which is always seeking THE MOST GLORIOUS AND PROLONGED EXPANSION until we reach a CRISIS (Hell breaks loose ... whatever) - and CONTRACTION. Attempts to correct this are short lived and we go through the same cycle over and over.

Until the Global Network honestly operates on a Global System whereby every economy is granted equal protection and they work in harmony with each other - Cycles of Growth - Crisis - Contraction will remain unavoidable.

 

[malyla]

Here is a blogspot that follows Martin Armstrong's Pi Cycle Theory (a.k.a. Business Cycle Theory).

http://marketvisions.blogspot.com/

Enjoy.

 

[Steadygain]

Here is a blogspot that follows Martin Armstrong's Pi Cycle Theory (a.k.a. Business Cycle Theory).

http://marketvisions.blogspot.com/

Enjoy.

Malyla,
This is scarey ! It's like you're unraveling the frabics of my being.

The entire Universe is structured on Mathematics and the undeniable FACT that when broken down to the lowest demonator there are a few numbers that ultimately hold the most Royal Positions.

I have never talked about this stuff on the MB - other than to make known that beneth everything - and ultimately when everything is viewed in it's most basic underlying and fundamental terms it all breaks down to Physics and Chemistry.

Our most advanced Civilization occured centuries before Christ in the Era of the Pyramids. Today's civilization - and the civilizations over the years simply see the Pyramid as a huge structure that was meant to function as a tomb. It is only when recognition is given to the Physics and Chemistry - especially the Mathematics behind the Structure that we come to recognize it is a Power House that is in Perfect Harmony with not only Planet Earth - but the Universal Characterics of our Solar System and the entire Galaxy.

He now conveys a far more signifcant message AND IN ALL TRUTHFULNESS THIS IS ENTIRE BASIS OF MY ENDEAVOR TO STUDY THE CYCLE THERORY. I have overwhelmingly been convinced that the 'Natural Laws' are what ultimately determine our Economic Circumstances and not Humanity's Influence.

We (the people of Planet Earth) primarily look at the Economy and our understanding of it's evolution from the foundation of the USA. People came from foreign lands just a few hundred years ago and determined that the inhabitants were inferior and therefore they immediately determined it was their right to not only destroy the culture of the natural inhabitants but to take everything (land and resources) and let the surviving few stay in the deserts. Then they brought slaves (also regarded as inferiors) to spur the economy with hard work. Women of course were largely regarded as insignificant but had a little higher status than the Native Americans and Slaves - as they were fundamental to society. But the powerful gained more power and thus our Economy was formed. With the Industrial Revolution and Electricity - Society immediately became based on Cheap Oil and Coal. As the Big Companies became increasingly powerful - the people of the USA - now went to foreign lands to gather all available resources. In a nutshell this is how most people would have to view our Economy and the Economic Circumstances which evolved to the present Global Network.

I (as Armstrong) have pretty much been convinced that Natural Laws supercede everything - and that IN FACT the dominate waves of BULL - BEAR Trends are more a consequence of these Larger Dynamics that are way over 'our inferior minds and all the more the interactions by which the powerful few subject the population at large' to live the way WE DO.

So the BOTTOM LINE - is looking beyond the garbage (the enormity by which mankind has disrupted the relationships with virually all life and the Planet itself) - and finding the underlying waves that dominate our activities and hence our Economic Picture. This would ultimately guarantee SAFETY during downward Trends and HIGH RISK during the upward ones.

Since Armstrong has chosen an undeniable - and one of the very few Royal Positions - it gives far more validity to his overall Theory.

I am very much ENJOYING THIS !!!

Thank you - my sweet - and have a great weekend.

Steady

 

[malyla]

Interesting model based on cycle theory. Shows a downtrend coming.

http://www.markettrak.com/special_143.html

Biz_Cycle is still F until mid Nov 2009 for a short upturn then back to safety Jan 2010.