* Actual Recommendations are marked by darker blue shade
all previous Periods are results of back-testing.** CONDITIONAL 14(2) IN PERIOD from Nov-30-2005 to Mar-30-2006 and corresponding Conditional Out Periods 14-15(1)&(2) are for the record only and their Profits are not included in the Performance Averages. We correctly predicted a major upturn in the Corporate Profits but the technical requirements for a buy signal were not completely met.
The Performance Tables show results from investing in ungeared Dow Jones Industrial Average Index (DJIA) excluding dividends, taxes and transaction costs.
The most current 12 months Recommendations and results are available by subscription.
The methodology validation is based on the U.S.A. Government data from 1949. The Recommendations have been published since 2004 and an independent organization audits the performance since June 2005.
The Business Cycle Index has a validated track record of correctly forecasting the most profitable long periods of the USA stock market (the “In Periods") that returned on average approximately 20% ungeared profit per annum. The "In Periods" outperformed by more than 250% the 55-year average market return of 7.8% (excluding Dividends).
Following the IN (Buy) signal, the market generally kept moving up; only occasionally falling by 1%-4% from the levels at the beginning of the respective "In periods". On one occasion (In Period 11) during the 1991 war in Kuwait, the market dropped -13.6% due to unexpected spike in oil prices to record levels. This was the weakest point of the Business Cycle Index over the 55 years. History may repeat itself and we do not attempt to predict the future oil prices.
The smallest annualized profits were still positive at 13.1%, 9.3% and 3.2% during "In Periods" 8, 11 and 14 respectively which again coincided with high oil prices. Professional Investors could use leveraged strategies during the "In Periods" thanks to reduced volatility on the down-side (refer to “Maximum Fall” column). Individual Investors are advised to discuss their personal financial situation with an investment advisor before using borrowed money/ leverage for investments - see important legal statement in Compliance.
Equally important, the Business Cycle Index has identified “Out of the market” long periods of relatively weak stock market performance when the average annual profit rate was only around 2% and was often negative - not worth the risk.
There was a 40% chance that a "Out Period" suffered a major market fall by up to -36% (refer to the "Maximum Fall" column).
Using borrowed money during these times would be risky and would not be recommended. Individual investors would be better off staying out of the USA equities and look for safety and opportunities in cash, fixed interest, bonds, properties and other asset classes. We may occasionally comment on such opportunities in unscheduled Special Situation Reports.
The unusually high gain of 64.3% during "Out Period" 9-10 was not justified on economic grounds. It was an example of an overheated market rising for too long while Corporate Profits were flat or falling. Not surprisingly, soon after that, there was a major stock market crash in October 1987 with one of the biggest falls of -34.7% in "Out Period" 10-11.
| Out Period | Date OUT | DJIA OUT | Date IN | DJIA IN | Months OUT | Max Fall | Period Profit | Annualized Profit |
| 1-2 | 3-30-51 | 249 | 5-31-51 | 250 | 2 | -1.3% | 0.5% | 2.7% |
| 2-3 | 8-31-51 | 270 | 3-31-54 | 304 | 31 | -5.5% | 12.3% | 4.8% |
| 3-4 | 3-31-55 | 410 | 3-31-58 | 447 | 36 | 0.0% | 9.0% | 3.0% |
| 4-5 | 11-28-58 | 557 | 11-30-60 | 597 | 24 | -0.2% | 7.1% | 3.6% |
| 5-6 | 11-30-61 | 722 | 5-29-70 | 700 | 102 | -25.8% | -2.9% | -0.3% |
| 6-7 | 5-28-71 | 908 | 3-31-75 | 768 | 46 | -36.4% | -15.4% | -4.0% |
| 7-8 | 5-28-76 | 975 | 8-29-80 | 933 | 51 | -23.9% | -4.4% | -1.0% |
| 8-9 | 3-31-81 | 1004 | 8-31-82 | 901 | 17 | -22.6% | -10.2% | -7.2% |
| 9-10 | 3-30-84 | 1165 | 11-28-86 | 1914 | 32 | -6.7% | 64.3% | 24.1% |
| 10-11 | 8-31-87 | 2663 | 8-31-89 | 2737 | 24 | -34.7% | 2.8% | 1.4% |
| 11-12 | 3-31-95 | 4158 | 5-31-95 | 4465 | 2 | 0.0% | 7.4% | 44.4% |
| 12-13 | 5-31-96 | 5643 | 3-31-03 | 7992 | 82 | -5.3% | 41.6% | 6.1% |
| 13-14* | 3-31-04 | 10358 | 11-30-04 | 10428 | 8 | -5.9% | 0.7% | 1.0% |
| 14-15(1)** | 3-30-05 | 10541 | 11-30-05 | 10806 | 8 | -5.0% | 2.5% | 3.8% |
| 14-15(2)** | 3-30-06 | 11150 | ||||||
| Average | 35 |
2.4% |
| In Period | Date IN | DJIA IN | Date OUT | DJIA OUT | Months IN | Max Fall | Period Profit | Annualized Profit |
| 1 | 5-31-49 | 168 | 3-30-51 | 249 | 22 | -4.0% | 47.6% | 26.0% |
| 2 | 5-31-51 | 250 | 8-31-51 | 270 | 3 | -2.8% | 8.3% | 33.0% |
| 3 | 3-31-54 | 304 | 3-31-55 | 410 | 12 | none | 35.0% | 35.0% |
| 4 | 3-31-58 | 447 | 11-28-58 | 557 | 8 | -1.5% | 24.8% | 37.2% |
| 5 | 11-30-60 | 597 | 11-30-61 | 722 | 12 | -0.6% | 20.8% | 20.8% |
| 6 | 5-29-70 | 700 | 5-28-71 | 908 | 12 | -4.4% | 29.6% | 29.6% |
| 7 | 3-31-75 | 768 | 5-28-76 | 975 | 14 | -3.3% | 27.0% | 23.1% |
| 8 | 8-29-80 | 933 | 3-31-81 | 1004 | 7 | -2.6% | 7.6% | 13.1% |
| 9 | 8-31-82 | 901 | 3-30-84 | 1165 | 19 | -0.7% | 29.2% | 18.5% |
| 10 | 11-28-86 | 1914 | 8-31-87 | 2663 | 9 | -1.0% | 39.1% | 52.2% |
| 11 | 8-31-89 | 2737 | 3-31-95 | 4158 | 67 | -13.6% | 51.9% | 9.3% |
| 12 | 5-31-95 | 4465 | 5-31-96 | 5643 | 12 | -0.9% | 26.4% | 26.4% |
| 13 | 3-31-03 | 7992 | 3-31-04 | 10358 | 12 | none | 29.6% | 29.6% |
| 14* | 11-30-04 | 10428 | 3-30-05 | 10541 | 4 | -0.6% | 1.1% | 3.2% |
| 14(2)** | 11-30-05 | 10806 | 3-30-06 | 11150 | 4 | -1.3% | 3.2% | 9.6% |
| Average | 15 | 27.0% | 20.2% |
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