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Samuel Benner was a farmer from the 1800s who wanted to understand how market cycles worked. In 1875, he published a book forecasting business and commodity prices. He identified years of panic, years of good times, and years of hard times.
Panic Years: These are years when the market panicked, either buying or selling a stock irrationally until its price skyrocketed or plummeted beyond anyone’s wildest expectations.
Good Times: Years Benner identified as times of high prices and the best time to sell stocks, values, and assets of all kinds.
Hard Times: In these years, Benner recommends buying stocks, goods, and assets and holding them until the “boom” years of good times, then unload.
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100+ Years of “Sure Thing”
At the bottom of his card, Benner wrote “Sure thing.” and for 100 years he’s been close to perfect. As a prosperous Ohio Farmer, the 1873 market panic was a blow for Samual Benner, and it wiped him out. When trying to understand why this happened, Benner discovered the notion of market cycles.
As a farmer, Samuel knew that the seasonal cycles affected crops, which then affect supply and demand, which affects the price. Benner looked deeper into these cycles and found an 11-year cycle in corn and pig prices with peaks every 5/6 years. This matches the 11-year solar cycle. Benner figured that this solar cycle affects crop yield, affecting revenue, supply/demand, and price.
The Benner cycle also uses a 27-year cycle in pig iron prices with lows every 11,9,7 years and peaks coming in at 8, 9, 10 years.
Studying market history helps you learn how these cycles affect price, and how they still affect price today. Now, the year is 2021, and on the Benner Cycle, we are just coming out of a panic cycle.
There isn’t another mention on the Benner Cycle chart until 2023, so we could keep grinding the market higher until it breaks, resulting in another market crash and “Years of Hard Times” in the market.
There is no exact science for market predictions, especially when it’s from a pig farmer from 100 years ago, however, the world is cyclical, and it pays to pay attention.
As one commenter said:
But even though it was 1875 math, I’d say it was pretty close. The Benner Cycle says that 2007 is a year of high prices and a time to sell stock. If you see the S&P chart below, this would have prepared you well for the coming 2008 crash.
When using the Benner Cycle, combine it with other indicators and reasons to take a trade. This cycle study is a great long-term warning sign for potential reversals and panics, but you still have to make it work within your trading plan.
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Here’s the tweet where I recreated the Benner Cycle chart (Since all other versions I found were blurry or faded).
And here is the original Benner Cycle chart that I used to create the updated version.