Module 2 – Stock market cycles

In this module you will learn a wide range of market timing tools. You will spend a lot of time with us, analyzing stock markets, the different cycles, bear markets and bull markets. And most importantly, this lesson focuses on how to sidestep potentially bad years in the stock market. But also, how to time market bottoms and get back into the game, buying stocks during a market crash.

Lesson 1: Decennial Pattern

There is an interesting pattern, called the decennial pattern, which was first published and written about by Edgar Lawrence Smith. “No one has a better track record of predicting the future than the very little-known Edgar Lawrence Smith”. Do not take our word for it. This is what Warren Buffett said back in 2001. So, Lawrence Smith worked on a theory called the decennial pattern.

We have built on the work from Lawrence Smith from 1938 and created an updated database of relevant data points of 140 years of stock performance. And through this, you will learn that stocks move in re-occurring cycles.

You will learn to identify which years are the poorer performing years in the stock market. And which years are usually the strongest ones in stocks. For example:

  • There is a year called, the phenomenal 5, years ending with 5, so 2015, 2005, 1995 and so on and forth. And if you invested only in the years ending with 5 in the last 14 decades, your overall performance would be a whopping 294%.
  • Compared to only investing in years ending with 0, so 2020, or 2010, or 2000 your overall performance in the last 14 decades would be negative 40%.

Therefore, clearly there is an advantage in the game knowing which years we should be invested in, and which years we should avoid. And there is a lot more you should know of here, and more importantly how to apply this in the real world of trading and investing.


Lesson 2: US Presidential Election Cycle

Election cycles happen every four years. There is more than 100 years of cyclical presidential election data and relevant data points we should look at. Understanding these cycles is powerful.

The pre-election year, or the year prior to the election is usually the one with the biggest gain, and the best probability of a bull market. With an average performance of 13% and 21 out of 26 years that are bullish years. The election year comes in at the second place and is not bad either. 9% average gain and 18 out of 26 years were bullish years. And post-election is really the worst one out of the three. In this lesson you will learn all these cycles in a lot more detail and how they play out within the years in the real world of trading. And most importantly how you can benefit from these in the long run.