Thursday, December 15, 2016

11 year cycle

I keep trying to find patterns and I keep being wrong.  I thought there was a 7-year economic cycle, then a 8-year cycle.  So I am probably wrong on this too.  With that said ...

I think events from 11 years ago might be repeating themselves. (The reason why it is longer than 7 or 8 years is because everything sort of froze up for several years.) Of course not exactly, but look at this.

December 14, 2016 - Fed raises rates to 0.50%
December 13, 2005 - Fed raises rates to 4.25%

The Fed raised rates 4 more times in 2006 before hitting its maximum of 5.25% for that business cycle.  I think the Fed will raise rates about 4 times this time before hitting a peak of 1.5%.

Last time the recession started in December 2007.  So this time a recession starts in December 2018. Last time, the Dow hit a high of 14164 on 10/9/2007.  So 11 years from this is October 2018, when the next crash will occur. So if there is any validity to this, and I think there might be, there won't be a recession or stock market crash in 2017.   The Dow could go up another 40% before the next high.  I don't think it will go up that much, but it could go above 25,000 before the next crash.

Last time the real estate market froze up in mid-2006.  So I expect this to occur again in mid-2017.  The luxury market has already peaked, but the regular market is still booming for now.

So that's my forecast.  Nothing to worry about until October 2018, when everything will go to heck again.

Update:  Sunspots also have 11-year cycles.

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