Are Brenner & Kondratieff Waves Valid in Commodities?

QUESTION: Whats up Martin,
I’ve been studying you since your handwritten and from reminiscence letters have been getting out out of your incarceration. You’re actually an incredible man sir.
I understand that each the Kondratieff and the Brenner cycles are largely simply coincidental to market cycles in the present day however my query is are each the Kondratieff and the Brenner cycles nonetheless correct for agriculture items and the farm financial system to today?
Thanks to your consideration of this query in addition to for all the great you’ve gotten finished for mankind.
Thanks.
Respectfully,
Mark

ANSWER: I believe your query is essential. I’ve in my library Brenner’s precise publication. They’re very uncommon, to say the least. Overlaying Brenner onto Wheat, we are able to see that through the twentieth century, they didn’t work. The query then grew to become why?

Persons are far too usually confused when observing a market. They suppose that that instrument itself possesses some inherent buying and selling character all by itself. I’ve usually mentioned that after I went to Economics class, the professor mentioned there isn’t any definable enterprise cycle as a result of every thing is random. Then I went to Physics class and was informed that nothing is random. I got here to the conclusion that it was the economics professor who was fallacious.

In Physics, we’ve got two separate rules which can be far too usually confused as the identical. The Uncertainty Precept was articulated by the German physicist Werner Heisenberg (1901-1976). It states that the place and the speed of an object can’t each be measured precisely on the identical time, even in idea. The very ideas of actual place and actual velocity collectively, in actual fact, haven’t any that means in nature. Successfully, if we improve the precision in measuring one amount, we’re compelled to lose precision in measuring the opposite.

The Uncertainty Precept has been regularly confused with the Observer Impact whereby the disturbance of an noticed system by the act of remark takes place as the results of using devices that alter the state of what’s being measured. To place this in widespread phrases, let’s say you’re taking a gauge to check the tire stress in your automobile. The very act of measuring the air stress leads to some air escaping. Therefore, the act of observing modifications the precise stress within the tire even minutely.

This is among the most fascinating features of Physics. Right here is my favourite cartoon explaining an necessary side of cyclical evaluation as effectively.

So what does this should do with evaluation in markets? What are we truly observing? The innate object be it gold, wheat, or the inventory market. If a tree falls in a forest and no person is round, does it make a sound? That each one relies on your definition of a sound. When you outline “sound” as requiring it to be heard by an individual or animal, the reply is not any. But is that the right definition?

This brings us to Kondratieff and Benner waves. Had been they really measuring commodities, or have been they measuring the cyclical interference of local weather, conflict, and 70% of the GDP being confined to agriculture? We clearly have an issue with the human interpretation of an remark. We’re then confined by our personal prejudices shaped in life. If we’ve got NEVER examine conflict or skilled conflict, then is it potential to have a look at the nineteenth century and understand that there was an interference available in the market habits by conflict?

Because of this basic evaluation at all times fails. Claims that that is the man who forecasts no matter based mostly upon his opinion or basic evaluation is solely nothing greater than a damaged clock can also be appropriate twice a day. The huge array of fundamentals which can be happening concurrently can by no means be sorted out by any human being. It relies upon upon the expertise of the observer. I’ve usually defined that folks focus solely domestically and sometimes on regardless of the Federal Reserve needs us to do. They don’t see that in flip the Federal Reserve is influenced by worldwide occasions. Thus, those that focus domestically, are blind to international developments. That is primarily why I developed Socrates for it’s humanly not possible to watch completely every thing. No human being can do that after which it’s not possible to type out the basics prematurely – solely hindsight. Many have ignored the basic method and turned to Technical Evaluation. Then the third department is cyclical evaluation centered on TIME.

Cyclical Evaluation should additionally incorporate physics to realize accuracy. In any other case, somebody who then identifies some cycle of 25 models and says see, it labored 5 occasions in a row, will lose the home for that relationship will change. That is the query of the Kondratieff and Brenner cycles. Kondratief noticed broad cyclical developments all through historical past. However they have been averages and he didn’t search a definitive time frequency. Brenner centered on sunspots and agriculture for he was a farmer and noticed the cyclical patterns unfolding earlier than him.

Nonetheless, the complexity of the market and financial habits is very similar to the double-slit realization. A single particle shifting by means of a single slit produces a linear output. However when a second slit is launched, then cyclical waves emerge. This illustrates the complexity. Every market is sort of a separate particle in that cartoon. By itself with a single slit, the end result tends to be linear as anticipated. However including that second slit produces complexity and cyclical wave interference. Thus, in evaluation, we should contemplate your complete international basket of particles to method the cyclical waves and interference.

There are such a lot of layers to cost exercise every displaying a novel frequency. This as soon as once more comes right down to human interpretation and might the analyst even see the complexity. Our arrays are the very best shot at correct cyclical forecasting and there are 72 fashions inside that – not a easy one-time frequency of a linear cycle. It’s the laptop that initiatives the end result, not any human interpretation. Then you need to have a database that’s unprecedented to back-test your complete evaluation. With out recreating the financial system of the world, it could be not possible for the pc to forecast conflict, the collapse of communism, or the 1929-style even in Tokyo in 1989.

Elementary evaluation can ONLY be used to elucidate AFTER the actual fact – to not forecast the long run. Consequently, the Kondratieff and Brenner cyclical waves are usually not correct in attempting to foretell the financial system or the subsequent nice crash in markets. We should respect that they noticed the highest layer of cyclical exercise, however behind that masks was local weather change popping out of the final ice age, the wave of innovation that introduced the Industrial Revolution which diminished the commodity affect, and conflict. It’s not that their work was fallacious. They have been the leaders in cyclical evaluation and pointed the way in which. It merely required extra exploration to grasp the complexity and wave interference from the impression of every thing, all over the place.