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©
2004-10
Business Cycle Investor
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Research,
Forecast,
Dow Jones,
S&P 500,
Corporate Profits,
Asset Allocation,
ETF,
Index Funds,
Stock Market Timing
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Asset Allocation | Research | US Index Funds | Stock Market Timing | ETF | Dow Jones DJIA | S&P 500Business Cycle InvestorUSA Corporate Profits & Dow Jones Forecast |
The methodology is not perfect. A macroeconomic model cannot give always right signals about a complex and unpredictable stock market that is also significantly influenced by random events, psychology and political decisions impacting on the macroeconomic fundamentals. The only certain thing about it is that one day it will produce wrong signal and professional investors using this general opinion should be always prepared for such event and manage their risk.
Subscriptions to the research are offered to a selected limited number of professional and institutional investors including Global Asset Allocators, Global Fund Managers and Proprietary Traders and are not available to individual retail investors.
The methodology is based on a new proprietary business cycles research applied to picking of the major broad market indexes. The investment model aims to improve chances of identifying the major (not all) more lucrative periods of the broad US stock market that are driven by macroeconomic fundamentals. Most profitable trades (home runs) are possible around the major turning points.
Predicting stock market direction is in our view for most of the time impossible as it often behaves irrationally like an unpredictable manic depressive who overreacts with bursts of optimism or pessimism for no apparent reason. However, there are times when Corporate Profits for the whole USA economy grow strongly which inevitably drives the USA stock market higher; in fact the correlation over the past 55 years was 93%. We call these periods the "In Periods" and they are most suitable for investing in a broad market index as stock picking is less relevant at that time. The "In Periods" are short and represented only 30% of time.
For the majority 70% of time during so called "Out Periods", our methodology was less reliable as markets were less correlated with the macroeconomic fundamentals. Almost half of the "Out Periods" experienced a major stock market crash. It was safer and more profitable to stay out of the market in cash or other than equities assets during such times due to the uncertainty and higher risk.
The "In Periods" were also not totally immune from the stock market volatility and sometimes experienced significant downturns but not as often as during the "Out Periods".
An average "In the market Period" from a buy to sell signal was 15 months long and, applied to Dow Jones Index, achieved 27% ungeared profit excluding dividends, taxes and transaction costs:
Similar performance would be achieved by investing in the S&P500 index.
The returns could be significantly enhanced through a prudent use of financial leverage, derivatives and picking stocks and sectors that are correlated with the cycle and typically outperform the market during the "In Periods".
Proprietary Traders use the turning points signals when deciding on potentially most lucrative "home run" trades.
An example of what's possible was our performance during the 2007-09 Global Financial Crisis:
· Triple-Digit returns from BusinessCycleInvestor.com leveraged strategies audited by www.TimerTrac.com
· Plus approx. 100% return from financial stocks picking in April and May 2009 (for full report click link),
· Picked March 2009 bottom (March 27, 2009 “Strong Buy” Recommendation),
· Warned in Nov 2007 of a potential global crisis (Nov 29, 2007 “Stay Out” Recommendation),
· Missed Lehman Bros collapse in Sept 2008… it shows the methodology is not perfect,
· In November 2008 issued Note that the current crisis should not lead to 1930s style Global Depression (Nov 20, 2008 Note).
The methodology was validated over more than 55 years and the forecast published since 2004. An independent organization audits the performance since June 2005. Performance tables have the results. The quarterly recommendations are made public on this website after 12 months.
Stock Market follows Corporate Profits trend
Our proprietary Business Cycle Index aims to identify major turning points in the Corporate Profits and correlated with it Dow Jones Industrial Average Index (DJIA).
Business Cycles live on
The USA GDP moves in cycles and Stock Market historically led GDP turning points by many months (graph data till July 1, 2009).
Purpose
The Business Cycle Investor Advisory Board aims to establish a new investment fund that will have an exclusive right to use the new business cycle and asset allocation model.
This website is a public performance record of the proprietary investment methodology in order to demonstrate its long term effectiveness and to attract experts with ideas on how to turn it into a product that should over time attract larger investment.
We are keen to hear from experts who have good track record in stock picking, asset allocation, sector rotation and forecasting various asset classes - especially Bonds and Property - as they often complement equity cycles and there is an opportunity to enhance the returns by joining forces.
We are in the news:
Check ETF stock prices:
| In Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Profit % | 47.6% | 8.3% | 35.0% | 24.8% | 20.8% | 29.6% | 27.0% | 7.6% | 29.2% | 39.1% |
| In Period | 11 | 12 | 13 | 14 | 14(2) | AVG | ||||
| Profit % |
51.9% |
26.4% |
29.6% |
1.1% |
3.2% | 27.0% |
| SUMMARY |
| RECOMMENDATION |
| SUBSCRIBE |
| PERFORMANCE |
| METHODOLOGY |
| EDITOR PROFILE |
| RESOURCES |
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| CONTACT |
US Department of
Commerce Bureau of Economic Analysis
Board of Governors of the Federal Reserve System
National Bureau of Economic Research Indicators
United States Department of the Treasury
Business Cycles Dating Committee
Business Cycles Theories - overview
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