David Gurwitz – Brexit and the Long Way Down for Markets

from Cycle Economist

From The Desk of David Gurwitz: For new clients, we mentioned on CNBC in late 2014 that we would not see more than 5% upside in Equities until the big crash starting in 2017 At the time, the S&P Futures was trading around 2120 Although it reached that level a few times afterwards, we felt being long stocks was risky, and many stocks lost a big portion of their market capitalization We sent the study below as #2016 – 013 Charles Nenner Research Center – Summary of 5 Economic Indicator Forecasts and Some Thoughts on “Fundamentals” – Jan 24, 2016 Sunday It explains how cycles work We quote in part from that study: Late in 2014, based on our cycle work, we noticed instability in the markets For our new subscribers, we review our philosophy: Cycles predict the ways investors will react to the news and events – based on rigorous analysis and calculations of past patterns. We do not know these events, but they do not have to happen for the effect to occur – at cycle tops or bottoms For example, if the Fed only thinks about raising rates, it already has an effect At cycle tops, the media will bring up every negative detail they can come up with. At cycle bottoms, the opposite is true – the media will bring up every positive detail they can come up with. When President Reagan began serving in 1981, it seemed that he could do no wrong – and longer term equity market cycles were up from that point,. Therefore, we consider these cyclical and target patterns to be more fundamental than so-called “fundamentals”., The problem arises when long term investors decide – based on cycles – to leave the markets and short term investors take over.

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