Kondratieff cycle
The Kondratieff cycle is a long cycle, typically lasting 55 to 60
years. It was discovered in the 1800s by Nikolai Kondratieff. I’ve
been reading about it in John Murphy’s “Intermarket Analysis” lately.
Today I reread part of his discription on it.
Part of me thinks that these cycles can’t really be correct. It seems
unlikely for there to be such recognizable and repeatable pattterns.
However, this particular pattern has proved correct over the last 250
years. If the data supports it, I should have a hard time refuting it.
I have heard that there are issues with whether these long term models
use an inflation adjusted stock index. When I was reading Frost and
Prechter’s “Elliot Wave Principle” they mentioned that some of the
elliot patterns were more recognizable under the inflation adjusted
Dow.
Doubts aside, the Kondratieff cycle calls for a “winter” declining
period starting in 2000 and lasting upwards of 10 years. One of the key
markers of winter is deflation, which I’ve read was experienced in
2000. The next marker is falling commodities prices. I’m not sure if
we have those yet, but I’m going to keep this theory in the back of my
mind.