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The Alchemist (11/09/2008)
By Al Thomas

THE TIDE HAS CHANGED

We are all familiar with the oceanic tides. The water rises and retreats twice a day affected by the moon as the Earth rotates.

It is one of the many cycles that occur regularly about us.

Night follows day. Autumn follows Summer. Man follows woman. Now wait a minute. Thatís not a cycle, is it?

One cycle many think they know, but few understand is the cyclical nature of the stock market. Actually it is not the market that is going up and down, it is the psychological change of the mass of investors and speculators who go from bullish to bearish and back again. What we see is the price change of individual equities and the mass movement of the total market.

If an investor will take the time to look at the price performance of the total market for the past hundred years he will see a rather obvious 16 to 18 year pattern. A 16 to 18-year movement up and about a 16-18-year movement down.

When a person steps back with a long term look at the hundred years and then slowly moves closer from a year, to a monthly , to a daily, to an hourly, to a 15 - minute, 5-minute and one-minute chart picture he will see that no matter the time zone chosen the price movement looks very similar.

The investor (he is really a long term speculator) who follows Wall Streetís advice with a Buy N Hold method does not realize there is a time when he should be out of the market and in cash. Of course, that is when the market is going down. There are some very simple methods that even the novice investor can use to protect his cash.

We have recently confirmed that the long time pattern is down.

It started in 2000 and if the 16-18 year pattern continues the market will not hit bottom for another 10 years.

Please donít kill the messenger. Predictions are notoriously wrong. My chance of being right is only 1 in 170 from a 20 year study. Even during the bear cycle there will be short term bull moves.

That is what we are starting to see now. Within the current 30 to 40% decline a small rise of 10 to 20% is common. The start of that market rise hit its bottom the end of October and will probably go up 10%, maybe more. It will then head back down again to continue its long term cycle.

There are services that accumulate, program and sell all types of cyclical information. The major one now is the November to May period when stocks outperform nine times better than the May to November period.

When the tide goes out all the ships move lower. Now the tide is changing. As the tide comes in all the ships move up. This is the period to be an owner of equities.

At least until the tide changes again. You may receive Al Thomasí investment letter at no charge for 3 months on the web site www.mutualfundmagic.com . Never lose money in the stock market again. His book ďIF IT DOESNíT GO UP, DONíT BUY IT!Ē has become a classic..

 

 

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