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Kerry Balenthiran
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Follow Kerry Balenthiran ( @17_6YrStockCyc ) on Twitter. Kerry Balenthiran studied mathematics at the University of Warwick and then worked as a Spacecraft Operations Engineer in the UK and at the European Space Agency. He qualified as a chartered accountant with Arthur Andersen and now works as... More
My blog:
The 17.6 Year Stock Market Cycle
My book:
The 17.6 Year Stock Market Cycle
  • The 17.6 Year Stock Market Cycle 25 comments
    Jan 27, 2013 3:36 PM

    The 17.6 Year Stock Market cycle is a new book by Kerry Balenthiran that is being published by Harriman House on 25th February 2013.

    From the introduction:

    "A cycle is a sequence of events that repeat over time. The outcome won't necessarily be the same each time, but the underlying characteristics are the same. A good example is the seasonal cycle. Each year we have spring, summer, autumn and winter, and after winter we have spring again. But the weather can, and does, vary a great deal from one year to another.

    The identification of a 17-18 year stock market cycle is nothing new, but I have discovered a stock market cycle consisting of increments of 2.2 years that I have extrapolated back over 100 years. I have called this cycle, rather modestly (and, after all, if has to be called something), the Balenthiran Cycle and that is the subject of this book."

    Contents

    Introduction

    Commodity Cycles

    Business Cycles A Historical Perspective

    Business Cycles A Modern Psychological Perspective

    Balenthiran 17.6 Year Stock Market Cycle

    • Part I: Bull Market 1982 to 2000
    • Part II: Bear Market 1929 to 1947
    • Part III: Bull Market 1947 to 1965 and Bear Market 1965 to 1982
    • Part V: Bear Market 2000 to 2018

    How to Trade the Balenthiran 17.6 Year Stock Market Cycle

    Conclusion

    Buy The 17.6 Year Stock Market Cycle from amazon.com:

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Comments (25)
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  • Matthew Claassen
    , contributor
    Comments (135) | Send Message
     
    Thank you for your comment.

     

    I noticed you are self publishing a book on cycles.
    How does your cycle work differentiate from publications on the same cycles (17 -18.20 and 2+ year harmonic) differ from J.M. Hurst Cycles Course studies of the 1970 where the 18 year and other cycles were identified using frequency studies, and his 1970 book The Profit Magic of Stock Transaction Timing?

     

    Of course, these cycles were first published by E. Dewey from the Foundation for the Study of Cycles in 1960.

     

    Are you familiar with their work?
    7 Feb 2013, 11:08 AM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Hi Matthew,

     

    Thanks for your interest. I’d like to clarify that my book is not self-published, it is being published by Harriman House who are an established UK publisher of financial books.

     

    I have recently started my seeking alpha profile and I am intending to use seeking alpha as a way to increase awareness of my work. Following the book’s publication on 25th February 2013, I will publish a number of articles providing more detail of the 17.6 year stock market cycle.

     

    In terms of your questions, yes I have heard of Ed Dewey and I have one of his books at home (Cycles: The Science of Prediction). I am not familiar with the work of Hurst though, so I shall look at the book you mention, particularly if he has identified a cycle of 17-18 years and a sub-cycle of 2+ years as you say.

     

    As far as I know my work is totally original but I fully expect that others may have noticed similar cycles. Art Cashin has discussed the 17.6 year stock market cycle, as has Steven Williams of Cycle Pro, but I don’t know anyone who has identified the intermediate turning points that I have. This is what makes my cycle work unique and I have extrapolated this cycle back 100 years to show that it works and then forward through the next bull and bear market to forecast market trends.

     

    I shall explain more in an article post publication. Thanks again for showing an interest.

     

    Regards,

     

    Kerry
    8 Feb 2013, 05:15 AM Reply Like
  • Matthew Claassen
    , contributor
    Comments (135) | Send Message
     
    It was JM Hurst who, as an engineer, detailed the five principals of cycle theory; Summation, Commonality, Variation, Nominality and Proportionality. These are important concepts when identifying, predicting and trading cycles. I believe it was also he who pioneered the concept of harmonics -- subdivisions of larger cycles.

     

    The 18 year cycle is simply an harmonic of the Kondratieff wave. There are fundamental economic principles that fold into this cycle.
    The 2+ year cycle is an harmonic of the the 4 year cycle, not an independent cycle in and of itself.

     

    A good basic discussion of this can be found in Martin Pring's Technical Analysis Explained. JM Hurst's work is, I believe, no longer published. You may have to find a used copy. He developed a 10 lesson, four volume course in the 1970's that is considered the seminal work on cycles in the markets.

     

    Ed Dewey has a lifetime of publications on cycles as he founded the Foundation for the Study of Cycles in the early 1900's and published monthly for decades. He specifically wrote on the 18 year cycle in 1960. Of course Kondratieff's publication was in 1920.

     

    I hate to burst your bubble, but in the 30 plus years I have been in this business, I have seen three separate people claim discovery of cycles that have been known and published for decades. Each case included their variation on the 18 year cycle. It was because of things like this that the Market Technicians Association developed a body of knowledge library so others can research their ideas to find if they are, or are not original.

     

    I can definitively say that if you are attempting to publish work as original without having full knowledge of Hurst and others before you, you are (accidentally) claiming as original, the works of others. It's like writing a master's thesis or PhD paper without guidance as to what other research had been done in that field in the past.
    8 Feb 2013, 03:24 PM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Hello Matthew,
    Hurst may have detailed five principles of cycles which I am unaware of, but I am fully aware of the origins of four, nine and 18 year cycles. In my book I give full credit to the pioneers of cycle research being Juglar, Mills, Kitchin, Kuznets, Kondratieff and Schumpeter.

     

    It was Schumpeter, not Hurst, who pioneered the concept of larger cycles being multiples of smaller cycles (Business Cycles 1939). Schumpeter states: “The success which Mr. Kitchin (Cycles and Trends in Economic Factors, quoted above) undoubtedly achieved simply by counting off his short cycles, observing that two or three of them seem to form higher units and that there is a sort of ground swell below both, illustrates the point very well.”

     

    I’d respectfully suggest that you read my book before determining whether you think it is original or not (it is published on 25th February 2013). I have no intention of claiming other people’s work as my own (even accidently) and having now (quickly) read “The Profit Magic of Stock Transaction Timing” I see nothing that conflicts with my own work. I am not claiming to have discovered an “18” year cycle or a “2+” year cycle, I have discovered a specific 17.6 year stock market cycle with intermediate turning points which I detail extensively.

     

    You are very knowledgeable about cycles and I’d be interested to hear whether in your 30 year experience you have come across anything like this before. I genuinely believe that this is a unique piece of work.

     

    PS – I’d like to thank you for bringing “The Profit Magic of Stock Transaction Timing” to my attention, Hurst’s work on shorter timescale cycles has given me something to think about and I intend to write something about this for seeking alpha in the future.

     

    Regards,

     

    Kerry
    10 Feb 2013, 12:21 AM Reply Like
  • New Low Observer
    , contributor
    Comments (2055) | Send Message
     
    Greetings Kerry,

     

    As an additional resource on the study of cycles, it may be worth reviewing the work Charles H. Dow, co-founder of the Wall Street Journal, and William Stanley Jevons. Their work on cycle theory led to the work of Schumpter and others. While it may seem as though referencing these "outdated" sources is unnecessary, it will answer some rudimentary questions that are often overlooked in the modern era.

     

    A great book on Charles H. Dow is "Charles H. Dow: Economist" by George Bishop (found here: http://amzn.to/VvhdPs).

     

    I also found the work of Dewey and Dakins of immense value in the practical application to interest rates, inflation and gold prices.

     

    Best regards.
    13 Feb 2013, 02:51 PM Reply Like
  • Scottonthespot
    , contributor
    Comments (27) | Send Message
     
    The 17.6/18 - year stock market cycle coincides perfectly with the 18-year Land (Land = ALL of nature's resources, in classical economics) cycle that Georgist economists have traced back hundreds of years - with rare exceptions for world wars, 1907 direct intervention, and a very few other "anomalies." The Land cycle goes back to the origins of Capitalism, in Europe, then later, America, because in fact, it is the result of a fundamental flaw in Capitalism to take into account the proper role of Land in production.
    Economics, but most especially neo-classical economics as practiced since the beginning of the 20th century (for more on why neo-classical economics displaced classical economics, see: "The Corruption of Economics" by Mason Gaffney).
    Land became conflated with Capital, though it is very nearly the opposite in characteristics.
    To VERY briefly summarize the difference between Capital and Land:
    Land is finite. Capital is infinite, within the restrictions of Land and Labor.
    Land typically appreciates as population and commerce intensify demand for it. capital depreciates through obsolescence and wear and tear.
    Land is made by nature. Capital is made by humans (e.g. buildings)
    Land includes locational advantages. Capital can be moved anywhere (e.g. A skyscraper could be built in Manhattan, or in central Wyoming, but only one location will provide a great return on investment).

     

    Now, given that 80% of bank loans are in mortgages (says Michael Hudson), and given that there is a well-documented multi-stage Land cycle (Homer Hoyt, Mason Gaffney), it's not hard to see why the great financial booms and busts occur over Land speculation. Since the stock market, eventually, follows the real economy and the credit cycle parallels the Land speculation cycle, it's also not hard to see why there is a 17.6/18-year stock market cycle. In fact, this has been documented and marketed by Georgist stock market analyst Phillip Anderson in his book "The Secret life of Real Estate." http://amzn.to/YLvcP8

     

    The last two busts were in 1990 and 2008, exactly on schedule. We are now in a Fed-fueled new up cycle, exactly as Anderson and others who follow the Land cycle, predicted. The Fed is the facilitator, but the re-liquidification of the monetary system is well-practiced and known, whoever the agent.
    5 Mar 2013, 10:57 AM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » A great reply Scot and very imformative. I'll shall do some research on land speculation and asscoiated cycles as it is not something that I am all that familair with.

     

    Thanks,

     

    Kerry
    5 Mar 2013, 11:04 AM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Scott,

     

    You need to read the book before you write it off as a "rediscovery" of a land cycle (Land Cafe group). I haven't come across any land cycles of 2.2 years/4.4 years that correspond to my 17.6 year cycle.

     

    Cycles of about 18 years are well documented in all kinds of areas (see Ed Dewey comments above), but my cycle is very specific to the stock market. This will give you and insight:

     

    http://bit.ly/Zd7UCu

     

    The book is out in a few weeks time.

     

    Kerry
    6 Mar 2013, 01:02 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2055) | Send Message
     
    Greetings Scott,

     

    Roy Wenzlick's work on real estate cycles (18.3 years) is fascinating in that he wrote a detailed stastical real estate newsletter titled "The Real Estate Analyst" from 1932 to 1974. The newsletter did analysis of all major markets in the country.

     

    Our recent article based on the work of Wenzlick and the factors that help identify cycle bottoms is found here:

     

    "Real Estate: A Sustainable Rise"
    http://seekingalpha.co...

     

    The beauty of Wenzlick's cycle work is that he bridges the gap between theory and application which is usually very tricky.

     

    Regards.
    6 Mar 2013, 01:22 PM Reply Like
  • Scottonthespot
    , contributor
    Comments (27) | Send Message
     
    Wenzlick corresponds to Anderson's cycles in "The Secret Life of Real Estate" http://amzn.to/YLvcP8 - only he goes back 200 years, and he was saying we are in the beginning of a new bull cycle in RE back in 2009 when the book came out (or earlier, when he was writing it, and it looked like the world was ending), so there's at least a 4 year track record to look at.
    Of course, buying at the long term bottom is usually a good bet, and buying after 50% crashes (March 2003, March 2009 (what is it about March?!)) is almost always rewarded, if you have the stomach, and the money, for it.
    Other writers of the Land cycle go back even further - Gaffney went back to Europe, though even he admits the data is much murkier when you get to the 18th century and before.
    The point is, that MAJOR booms and busts (not the relatively smaller ones) are based on Land cycles and that there really is no such thing as a business cycle; a little analysis will show why, since businesses produce capital goods, and these can always be increased in response to demand, and throttled back due to lack of demand. This is not so with Land, which is fixed in place, but not in value, over time, and it's the value, or rather, the perception of future value, that drives the credit cycle of the banks.
    Following Georgist theory further, as the founder Henry George did in 1879, in his opus "Progress and Poverty" one sees that the way to finally derail the cyclical capitalist system is to collect as close to 100% of the Land Rent as possible as a Land Value Tax, and untax everything else (Economic Rent, which includes other natural opportunities besides actual land, is generally estimated to be more than 1/3 of GDP, so it's plenty to run a reasonably sized government on, and that's even before the beneficial effects of removing the deadweight loss incurred by taxes on productive activities). Conversely, rewarding speculation and Land-hoarding, as we do now, leads to greater volatility and more extreme booms and busts - exactly as we've seen. This probably won't change the 18-year Land Cycle, but it should exaggerate the extremes of it.
    6 Mar 2013, 03:49 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2055) | Send Message
     
    Hi Scott,

     

    It seems that Wenzlick and Anderson might be getting their info from the same source. Wenzlick plots the real estate cycle from 1795; I got his newsletter and book from 1932 to 1942. good stuff overall.

     

    Regards.
    6 Mar 2013, 04:01 PM Reply Like
  • Tactical111
    , contributor
    Comments (156) | Send Message
     
    Kerry, just curious; how do the precious metals enter into this cycle and is it covered in your book? I have it on order btw from Amazon.
    10 Mar 2013, 05:34 PM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Hi Tactical111,

     

    The interaction with commodities is discussed but the cycle is primarily about stocks. I do mention a gold top in 2015 though.

     

    Thanks for ordering the book, I hope you enjoy reading it.

     

    Regards,

     

    Kerry
    11 Mar 2013, 02:22 AM Reply Like
  • flash9
    , contributor
    Comments (3677) | Send Message
     
    New follower. Enjoyed yuur coments see my note to y in the inbox A
    10 Mar 2013, 11:25 PM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Thanks flash9.

     

    Regards,

     

    Kerry
    11 Mar 2013, 02:23 AM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    i am rooting for you Kerry.

     

    long in the money Dec 75 delta SPY puts
    22 May 2013, 02:07 PM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Thanks Naples, I appreciate it.
    23 May 2013, 04:00 AM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    I love the JNK HYG selling off....forebodes correction or bear mkt. one can argue the treas bond selloff as the reason but I believe in the order of capital structure.

     

    I want to keep pounding the SPY Dec puts on any bounce. I may even pick up some VXX at the right time.

     

    Love short FXI thru FXP or short EEM thru EEV...major laggards
    29 May 2013, 12:49 PM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    Kerry

     

    if the hard reversal day on 5/22 turns out to be the top then I think you were right.

     

    it seems we may have a null set of positive outcomes for market bulls right now. if the global economy picks up, Fed tapers QE. if global economy slows, big earnings miss in 2H.

     

    the best outcome for bulls is global economy picks up and Fed tapers QE. Correction over bear mkt.
    31 May 2013, 10:11 AM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Hi Naples,

     

    I am waiting with bated breath, but we need to see how it pans out. The markets definately got over heated and were due a breather, whether this turns into a bigger correction remains to be seen but I will be surprised if earnings match pumped up expectations.

     

    All the best,

     

    Kerry
    31 May 2013, 10:39 AM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    I don't know how you feel about this but even if the market bounces to a marginal high and double top formation, I would still consider you right. For me, I am more focused on the cycle low in Aug-Sept time frame which will undoubtedly involve a test and possible protrusion of the 200dma -- this is the bigger picture right now. Hence, I own the deep in the money Dec SPY puts. I would invite a bounce to retest high or to put in a lower high and allow me to add to the position.

     

    If the bulls are right about "partying like 1999" then I think the top call has to be revisited.
    31 May 2013, 11:14 AM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    Kerry,

     

    I think your top call is in the bag. I hope your low call in August- Sept timeframe is right too

     

    The action I am seeing now, the bounce I believe will be a lower high.
    31 May 2013, 04:56 PM Reply Like
  • Kerry Balenthiran
    , contributor
    Comments (138) | Send Message
     
    Author’s reply » Hi Naples,

     

    Thank you for your comments. The top call looks good and I, like you, am now focused on where the low occurs.

     

    People were naturally sceptical about my book but are now revisting my work.

     

    I don't want to just be right about one call, I want to show that cycle analysis, and particularly the Balenthiran Cycle, work.

     

    Regards,

     

    Kerry
    3 Jun 2013, 11:53 AM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    well the most important thing is calling the intermediate lows and highs and the multi year tops and bottoms.

     

    its easy to trade if you can get that right.
    19 Jun 2013, 04:17 PM Reply Like
  • naples
    , contributor
    Comments (286) | Send Message
     
    hope people took advantage of Kerry's work. you cant get closer to the top than he did.

     

    Kerry, get your gold work done
    20 Jun 2013, 11:02 AM Reply Like
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