Market Predictions from the Foundation for the Study of Cycles

The Foundation for the Study of Cycles was formed during the Great Depression to try to figure out why it happened. It was staffed and funded by leading intellectuals and business men of the day.

Right (they claim to have a very impressive predictive track record) or wrong (the Foundation was convened by Herbert Hoover before his bid for re-election, so he obviously didn’t want the Foundation to look at problems his administration caused), the Foundation claims that market cycles could have predicted the Depression, as well as subsequent bull and bear markets.

Richard Mogey – current Research Director at the Foundation – has just publicly announced the following predictions:

  • Because of a convergence of numerous cycles all at once, the stock market may go up for a little while, but will crash in 2010 and reach all-time lows late 2012. Mogey says that the 2008 crash was nothing compared to the coming crash
  • Gold may correct in 2009, but will go up in 2010 and peak in 2011
  • Silver will follow gold
  • Oil may experience a short-term correction, but will form a major top in 2011
  • The dollar will decline until at least 2012, although there might be short-term bear market rallies
  • Interest rates on high-grade paper will decline later this year and continue declining until 2012
  • Interest rates on low-grade paper could move higher for a while

Mogey argues that using the Foundation’s cycles, investors can also make profitable intermediate-term trades based on shorter-term trends, and recommends using a 2% back stop (with the stop only pegged to the close of daily trading).

The Foundation claims that it has charted the cycles of individual companies’ performance for 44 years, and says that it recommends shorter-term trades only on those companies that have the most consistent cycles.

Weiss Research, Inc. just announced that it has purchased the exclusive rights to the Foundation’s data on individual companies, ETF performance and other metrics and has formed a joint venture called the “Foundation Alliance” to provide information and investment recommendations.

This could be the ultimate goldmine of investment insight, or a huge scam.

Note: I am not an investment advisor and this should not be taken as investment advice.

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  • I am skeptical of market models and predictions. Unseen billionaire financiers can cause the Fed to print money, raise the interest rate, choke off credit, etc. The Foundation can make it look like several mathematical trends are being analyzed, but who really know? A tyrants psychology within the heads of a handful… might crash us into economic oblivion- or not.