Replies to post #6429 on Short Term Trading Member Forum

[mr_cash4]

bliss, re. Kondratieff wave, I agree that the most likely bottom was in 1940s, so that the next bottom was due end of 1990s, and it also means that we got a right-translated cycle high back in 1982 when the interest rates peaked, 2/3rds into the cycle length as expected.

and, imho, it means that we are heading into hyperinflation, but that's still way down the road (i.e. about 30 years from now when another peak in interest rates is due) because anytime a country debases its currency (like the U.S. Dollar right now), it results in hyperinflation (e.g. like Argentina recently, and Weimar Germany in 1920s/1930s).

and even though this will decimate the stock market in the final analysis, the early inflationary period can be positive for the stock market.

[dgilber]

Some trivia, fwiw: I did some testing with long-term wheat data (Beveridge wheat price index, annual, 1500-1869) a while ago. Results showed that the 54-year Kondrattiev wave was virtually nonexistent before 1600 or so, and feeble and irregular until about the 1789 low. (My bandpass filter shows a low in 1775 or so.) From then on, it is reasonably well-defined.

Conversely, there were cycles of around 72 and (especially) 36 years that were much stronger (by a factor of 10 to the 68th overall) and better defined over pretty much the whole span of data.

If you run a fixed-span periodogram over 300 years (1569 - 1869) you do get a big bump around 54.5 years in length. This could be what Mr. Kondrattiev was looking at. Which is fine, so far as it goes. Remember Hurst says to use the periodogram as a starting reference rather than a definitive result...

The data is from:
http://www.webspace4me.net/~blhill2/data/commodities/wheat/wheat-Beveridge-1500-1869-Y.txt

My chart is basically the output of a bandpass filter comb.

Not to criticize the beloved Kondrattiev cycle, only to point out that there is evidence to suggest it has only been around for 220 years and so may not be the dominant long-term cycle it is made out to be. I find that cycles that suddenly spring to life have a tendency to suddenly fizzle out after a temporary run... Will this one? We might see over the next century or so...