Monday, October 29, 2012

Money Show - Robert Sneddon

Robert "Hap" Sneddon is president and founder of CastleMoore Inc. His talk was called "From History to Portfolio Construction to Where We are Today". He had a very interesting talk on cycles.

Cycles are talked about, but not used. Cycles are seen, but not accepted. Cycles are preached, but not practiced. We see all sorts of cycles in the financial world. We have Presidential cycles of 4 years. We have cycles of faith and deposits (Deposits go down when faith (i.e. religion) goes up and vice versa). We have cycles of cash balances and stock prices. (Cash balances and stock prices go the opposite way.) We have cycles of inflation. We have cycles of bull and bear markets.

We are looking for cause and effect. However cycles do not explain things, they just are. The Elliot wave theory says that psychology causes cycles. The moon/tide cycle is a natural cycle. Cycles underpin everything. We humans see patterns in everything. (That is why we do charts.) But, again, cycles do not explain anything.

To read about the Benner cycles and Fibonacci numbers, see David McMinn's site.

Cycles nest. See chart below. Gavin's version of the Benner cycles looks like this. This is what he says the stock market cycles look like. We are in the middle cycle, see the X mark. The next big one will start in 2019.

Because of the bell curve, we have reversion to the mean. Use this reversion to the mean to reduce risk. Look for extreme outliers.

You can see and hear this speaker at the Money Show Toronto, 2012 site.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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