Thursday, Jul 19, 2007
Some personal k-wave analysis
Market Oracle: End of the Financial Markets Boom
For those of you interested in kondratieff-wave theory I have been looking at data and have come up with a revised version based on debt and secular cycles of stocks. Please read comment 1.
Posted by sold 2 rent 1 @ 08:11 AM (240 views) Add Comment
13 Comments
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1. sold 2 rent 1 said...
Here are my 3 reference graphs for this analysis
1. http://www.marketoracle.co.uk/images/Paul_19_4_07a.png secular stocks cycles
2. http://www.thelongwaveanalyst.ca/downloads/NonPublicDeptPerGDP_multi.doc Us Debt cycles
3. http://www.thelongwaveanalyst.ca/downloads/Kondrairff_gold.doc 4 k-waves with dates
Kondratieff’s theory was based on price data and as shown (in graph 3) has had 4 occurrences since 1789.
When looking at debt and stocks data (graphs 1 and 2) we have problems mapping this data into the 4 phases. Instead I propose that the real underlying cycle based on stocks and debt has only had 3 occurrences. I have a big problem with k-wave number 2 as being a valid k-wave. In the new analysis k-wave 2 is merged in with k-waves 1 and 3.
The new debt and stocks cycle looks like this:
1 2 3
Spring 1789-1802 1865-1907 1949-1966
Summer 1803-1816 1908-1920 1966-1982
Autumn 1816-1835 1921-1929 1982-2000
Winter 1835-1864 1930-1949 2000-2020????
Total 75 years 84 years 71? years
Peak debt 150pc GDP 270pc GDP 450?pc GDP
The interesting thing is that inflation (EG WWI) only erodes debt and merely prolongs the time it takes debt to reaching its elastic limit.
Proper debt destruction that finishes up a whole cycle only happens with a deflationary depression.
Any comments are welcomed.
2. sold 2 rent 1 said...
The table was messed up in the earlier version
1 2 3
Spring 1789-1802 1865-1907 1949-1966
Summer 1803-1816 1908-1920 1966-1982
Autumn 1816-1835 1921-1929 1982-2000
Winter 1835-1864 1930-1949 2000-2020????
Total 75 years 84 years 71? years
Peak debt 150pc GDP 270pc GDP 450?pc GDP
3. sold 2 rent 1 said...
This table may be better
1 2 3
Spring 1789-1802 1865-1907 1949-1966
Summer 1803-1816 1908-1920 1966-1982
Autumn 1816-1835 1921-1929 1982-2000
Winter 1835-1864 1930-1949 2000-2020????
Total 75 years 84 years 71? years
Peak debt 150pc GDP 270pc GDP 450?pc GDP
4. sold 2 rent 1 said...
Try this table:
1 2 3
Spring 1789-1802 1865-1907 1949-1966
Summer 1803-1816 1908-1920 1966-1982
Autumn 1816-1835 1921-1929 1982-2000
Winter 1835-1864 1930-1949 2000-2020????
Total 75 years 84 years 71? years
Peak debt 150pc GDP 270pc GDP 450?pc GDP
5. Mark said...
interesting article, going on that we are in for a huge crash........lets hope, it will teach the greedy bunch
6. little professor said...
Debt
7. Stoatgobbler said...
Not really following this. Is the idea that we are due a crash this winter, or any winter between 2000 and 2020? Or something? I'm not sure this is very credible is it?
8. sold 2 rent 1 said...
Cheers little professor. the table looks excellent now
9. planning4acrash said...
Any chance of posting some of this on the wiki?
10. planning4acrash said...
All I can say about that is that I hope you are wrong, winters aren't nice: 1835-1864 saw the end of the initial Georgian boom that built places like Bath, lots of wars all around Europe and beyond, 1930-1949 involved a world war with rationing etc lasting way longer, I hope that 2000 - 2020 is a bit more peaceful and more prosperous than the last few winters, tho things with the Russians, Iran, etc. don't bode well.
11. sold 2 rent 1 said...
planning4acrash,
I can't say I am looking forward to a k-winter either.
I have emailed these comments to Ian Gordon of the thelongwaveanalyst.ca . He is a major player in understanding Kondratieff waves.
I will post any comments he sends me.
Kondratieff theory has always been misunderstood and misrepresented. Maybe my "debt-secular stocks" theory will smooth the way to a better understanding of long wave cycles.
K's original theory used price data. Whilst price data is useful it does not capture the manias, fear and greed in human nature.
Stocks and debt capture fear and greed very well.
Isn't wiki supposed to be a consensus opinion. At the moment I only invented this theory yesterday so I have a consensus of one. Do I have a second?
12. sold 2 rent 1 said...
Stoatgobbler,
Please read the article below for an overview of Kondratieff theory.
http://www.kwaves.com/kond_overview.htm
This should help to understand what I am going on about.
The k-winter is a period of time (17-18 years) that started in 2000 where stocks are in a secular bear.
During this k-winter the debt bubble will also burst.
13. Stoatgobbler said...
Thanks vm sold 2 rent, appreciated.