Economic Sunshine?

While Royce Tostrams might be a “market guru”, there are 2 things he doesn’t know anything about. Cycles & Cars. Let’s start with cycles. He posted an article in the Dutch Financial Telegraph titled ‘Economic sunshine’. In my opinion he couldn’t be further from the truth. He posted the following chart (source: telegraaf.nl) claiming that the economy and thus the stock market are heading for good times.

Tostrams Cycles

As was shown many times before, and more recently by @hoefgeest various cycles are not in sync, but have lagging characteristics (or leading based on how you look at it).

Business cycles

 

Tostrams must be confused and mixed up the financial cycle with the ecomonic one, which as we can see shows a 2 year offset. Since Tostrams claims a 4 year repetitive cycle (which is also wrong) he is exactly at the wrong end ¬†of the equation. A simple look at the longterm AEX chart shows that we are well underway in a cycle that started after the financial meltdown in 2008. As we have shown earlier in ‘are we there yet?‘ the market is due for an important low somewhere around 2020. The AEX chart below gives a simplified cycle count. Future cycles are approximately the same length as past cycles, indicated by yellow and red lines. Given that, the AEX today is at (or close) to the crest of its current cycle followed by making a low in 2014-2015, followed by another cycle that will take it to its final low in 2020-2021. Also note that the AEX in its current cycle has not exceeded it’s March’11 top. This is called a ‘left translation’ which means ‘the sooner the top, the bigger the drop’.

 

AEX Long term

 

Now about cars. Tostrams is driving a Chrysler 300. We all know that nothing is better than a Porsche 911 Turbo ;) If for some reason Tostrams turns out to be right, he can drive my car. It’ll be still a 1-1 though which he will admit after driving :)

 

911 Turbo

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