Nov 03 2011

Long-Term Stock Trends Support Maslow Window Forecasts

Published by Dr. Bruce Cordell at 11:31 am under Wave Guide 1: Economic Growth

The Wall Street Journal (9/12/11; E.S. Browning) recently highlighted more impressive, long-term evidence that we are rapidly approaching the next 1960s-style, transformative Maslow Window, expected to open by mid-decade.

Professor Richard Sylla’s intriguing plot of stock market behavior reveals the secrets of our past, over the last 200 years, and points toward our near-term, ebullient future.
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Sylla, an economic historian with NYU’s Stern School of Business, has studied stock data back to 1790 and produced this (above) marvelous graphic showing annual returns as inflation-adjusted, 10-year averages including dividends. He used the S&P 500 back to 1871 and his own calculations from 1790 to 1860, augmented by data from Bryan Taylor (Global Financial Data).

Interpreting Professor Sylla’s data in the context of Maslow Windows leads to two key results:

1) Based on his reading of the last 200+ years of stock market waves, he forecasts a significant upswing of stocks — specifically 6.5% annual average — in the next decade (see red line post-2010).

Even if we had a couple more years of bouncing around, 2013 to 2022 would be much better … I think the country is going to recover and go on to prosperity again …

His forecast is consistent with the expected timeframe and market behavior of the next Maslow Window.

… and …

2) Each of the Maslow Windows of the last 200 years — including their financial panic/great recession precursors — is clearly identifiable in Sylla’s data. This includes the Lewis and Clark Maslow Window (1791- 1804), the Panic of 1837 and great recession until 1843 plus the Manifest Destiny Maslow Window (1847-1860), the Panic of 1893 and great recession until 1899 plus the Peary/Panama Maslow Window (1901-13), and the Apollo Maslow Window (1957-69).

According to Browning, Professor Sylla also sees the Panic of 1893 and the great 1890s recession as having special significance for today:

Prof. Sylla says the current period resembles a downturn period in the late 19th century.

These parallels with long-term market data, over the last 200+ years — in addition to long-term trends in growth super-cycles, GDP, societal energy use, and others – provide increased confidence in the timing and positive character of the next Maslow Window expected to open near 2015.

One response so far

One Response to “Long-Term Stock Trends Support Maslow Window Forecasts”

  1. Karlon 15 Jan 2012 at 8:57 pm

    “Professor Richard Sylla‚Äôs intriguing plot of stock market behavior reveals the secrets of our past, over the last 200 years, and points toward our near-term, ebullient future.”

    Ebullient for whom? Have you considered the possibility that the stock market trends might only indicate prosperity for the top 1% of earners? Jobless recoveries, a coming robotics revolution etc.

    Hi Karl,
    Despite the flowery prose, I was making an empirical point. We know from the history of the last 200 years that widespread ebullience is typically produced by a major boom that positively impacts many people’s lives. That’s what sets the Maslow Windows apart (a low Gini index) from other booms.

    What’s intriguing is that Sylla’s plot tracks all the Maslow Windows. And the fact that he’s forecasting another decade or so of prosperity suggests — like other evidence highlighted on this website — that it’s about to happen again.

    Hang in there Karl, it’s going to be like nothing you’ve ever seen.
    Best regards,
    Bruce

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