The Big Picture for Investing

There is nothing new under the Sun.

The great trader, Jesse Livermore, wrote that the market would never change because human nature never changes. We are always moved by fear and greed. We are greedy when we should be fearful. And we are fearful when we should be greedy. That's life. That's the marketplace.

A long-forgotten market forecaster, Edson Gould, studied the stock market from 1881 to 1960. Gould discovered that the market followed a predictable pattern every decade. The early years were years of a bottoming process. The middle years of the decade were times of rip-roaring Bull Markets. The final three years of a decade were most likely to be filled with panics and crashes. That's the road map. That's the Big Picture. It's that simple (I'm listening to you, Barbara/smile).

I remember boring Joel about the market one evening. We were having dinner at the Main Street Station Casino All-You-Can-Eat-Buffet. The year must have been 2003 or 2004. Anyway, I had just read Larry Williams' book, The Right Stock at the Right Time: Prospering in the Coming Good Years (2003) . When I discovered the seasonal cycles and the ten year decade pattern in his book, I felt like I had discovered the keys to the kingdom. I excitedly told Joel that the market would have a panic around the year 2007/2008. He listened politely but 2007 was 3 or 4 years in the future. Why would Joel care to know that the market might crash towards the end of the decade? Well, I cared and I was on alert for a panic throughout most of the decade.

I could bore you guys for hours with technicalities and details. But what matters to you as long-term investors is the big picture. And I can tell you tonight that the big picture is bright, although there will be ups and downs along the way. We will see a significant bottom in October 2012, so I will be on guard for a nice bottom and buy opportunity around that time period. 2015 should be a crazy time of good returns. And, since there is nothing new under the Sun, we should be prepared for the obligatory panic and crash around 2017 to 2019. 2022 (either August or October) should be the buy opportunity of a generation.

That's the Big Picture, guys. That's the big picture ahead of us. It's that simple.

Later,

Wink

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