Cyclic Economy Visualized

"Economy is moving in cycles" - one phrase I've heard a lot of times untill I clearly realized it.

Economy itself is a vague concept to explain, even by the best economists out there.

Most people better catch things when they are visualized.

Explaining the cycles of economy is a great example for it.

Demystifying the Benner Cycle: A Look at a Historical Market Timing Tool

The world of investing is filled with charts, graphs, and theories - all claiming to describe the present. Some try to predict the future.

One such theory is the Benner Cycle, a concept that has been circulating for over a century.

Today, we'll delve into the Benner Cycle, understand its core principles, and explore its potential strengths and weaknesses.

A Blast from the Past: The Birth of the Benner Cycle

In 1875, Samuel Benner, an Ohio farmer, published a book titled "Benners Prophecies: Future Ups And Down In Prices."

Within its pages, he presented a chart outlining cycles he believed dictated future market movements.

This chart, now known as the Benner Cycle, divides years into three categories:

Panic (A): Years marked by irrational selling and market crashes.
Good Times (B): Periods of economic prosperity and high prices.
Hard Times (C): Years of economic hardship and potentially good buying opportunities.

The chart assigns specific timeframes between these phases, suggesting a predictable pattern. For instance, there might be 18 years between periods of "good times."

Can the Benner Cycle Help You Time the Market?

The allure of the Benner Cycle lies in its promise of market timing – pinpointing exact moments to buy and sell for optimal profit.

However, there are crucial considerations:

Historical Accuracy: While the Benner Cycle may align with some past events, it's important to remember that past performance is not a guarantee of future results.
Oversimplification: Financial markets are complex ecosystems influenced by a multitude of factors – economic data, geopolitical events, and investor sentiment, to name a few. The Benner Cycle doesn't account for this complexity.
Psychological Biases: Investors clinging to the Benner Cycle might miss out on opportunities or make emotional decisions based on the chart's predictions, potentially harming their portfolios.

The Takeaway: A Tool, Not a Holy Grail

The Benner Cycle offers a glimpse into a historical market timing theory. However, it shouldn't be the sole driver of your investment decisions.

Here's a more balanced approach:

Diversification: Spread your investments across different asset classes to mitigate risk.
Long-Term Focus: Don't get caught up in short-term market fluctuations. Invest for the long haul and stick to your well-defined financial goals.
Fundamental Analysis: Research companies and industries before investing. Understand their financials and long-term prospects.

By combining these strategies with a healthy dose of skepticism regarding market timing tools, you can navigate the investment landscape with greater confidence.

Remember, the Benner Cycle can be an interesting conversation starter, but a sound investment strategy is built on a foundation of research, diversification, and a long-term perspective.

I've worked on automating the entire process described above, to the level of no more than 10 minutes of work per day, on a more than 50 tickers portfolio.

I call it Investi-Cation (formerly Noti-Vest), as it is even notifications-based, so I won't need to be hooked to the screen.

Soon I'll be starting to offer it for public use.

Hop on the early adopters waiting list, and enjoy some very nice advantages once it's in your buy zone!

I'm in!