The Little Book of Stock Market Cycles: How to Take Advantage of Time-Proven Market Patterns

Chapter Four

The Coming Boom

Getting Ready for the Next 500 Percent Move

Super booms of the past were conceived during wartime and financial crises with pent-up demand, elevated government spending, and mushrooming inflation; weaned on peace, political leadership, and effective governing; then fed a steady diet of cultural paradigm-shifting enabling technology that changed the world and the way the average person on the street lived.

Once major wars ended and the bill came due, inflation peaked. As the inflation rate leveled off years later and financial crises and panic mitigated and the economy began to find some footing, nurtured by pragmatic and progressive government policy and initiatives, new game-changing technologies and ways of life ignited the boom. Heightened consumer spending spurs business and economic growth and the great economist Keynes’ “animal spirit” of business, entrepreneurs, and investors is restored, shifting the boom into high gear. Demand for new goods and services generates mounting consumer spending, which puts the boom into overdrive until it reaches critical mass and cruising altitude before falling back to earth.

Unemployment is high, the Great Recession is hardly in the rearview mirror, and global debt is a mounting concern—these are the headlines and newsworthy stories of today. The average investor is saturated with negative news from brokers, family, friends, and government. So my super boom prediction made in May 2010 that the Dow would reach ...