Good read. I guess something big is happening somewhere every 8.6 years.
Reality is clearly not random. But how much predictive value do cycle-theories really have? For every correct prediction, these methods deliver dozens that are false. You cant make money or run your life that way. You cant even do birth control that way. LOL
Yes, I've been always interested in this cycle stuff but I'm skeptical. What I found most interesting about the article was how much value some of the hedge funds actually put in it. More than a rational person might ever dream of.
As for random walk and efficient market hypothesis, I think they got it wrong. Markets are chaotic, not random. The problem is that a lot of people use the terms chaos and randomness synonymously, including this Martin Armstrong guy. Chaos is actually repeatable,given all the conditions are EXACTLY the same. Randomness is by it's nature not repeatable. There is no repeating pattern. The 2 are not interchangeable terms in any way whatsoever. Papers were written and phd's and prizes were given to academics regarding "A random walk down wallstreet" etc. They didn't even understand the difference between chaos and randomness. The initial condition of a security makes all the difference. This is why value investing works over long periods and beats growth investing. Random walk theory would have you believe that values(over or undervalued) don't even exist in the market....all stocks are supposedly priced correctly. As any good value investor can tell you, that belief is BS.
I'm beginning work on a trading machine which is not related to value investing in any manner whatsoever. It will basically be a trend following etf based approach. It will use only long etf's so that they can be held for longer periods, probably only weeks to months. I'm going to test it with regular and 2x leveraged etf's. No short etf's allowed. In place of short's will be sectors that move in opposite such as US dollar and US bond etf's. Still in the works. I'm thinking 4 etf's total. At times only 1 etf's may be in play while the other 3/4's of port is in cash.
Doc, RG, Musk, Arwen, anybody? Suggestions are welcomed. The only goal is for this to beat the S&P over any 6 month period. My initial thoughts are just to go with the strongest sectors on a relative strength basis....a momentum approach. I might also test a value oriented version in which the most beat up sectors might be used, although this approach might be harder to swallow, but could yield higher returns over longer periods. Lost of testing to do. First the momentum one.