A common piece of advice you'll see for investing is "time in the market beats timing the market." This is good advice and the root of nearly all large fortunes.
However
There is a little twist you can add that will help you time market cycles and do even better. Remember that markets are just the result of people buying and selling. The market can be highly dependent on emotion in situations where real value inflows and outflows are difficult to measure (think a cryptocurrency) or relatively immune to emotion in situations where real overheads are significant and real demand is relatively well quantifiable (think traditional commodities).
Here's the gem: the more a market is like the former (without hard to adjust inflows and outflows) the more it is subject to market cycles. And market cycles in these situations are generally the result of the main investors forgetting the pain of loss (causing bull markets) and forgetting the euphoria of gains (causing bear markets). That is a biologic phenomenon. Markets driven by younger people will have shorter market cycles as their neurons are highly plastic; those driven by older investors tend to be longer as they have more memories and less neural plasticity.
As the most common investor of a given market's age increases, the market cycles get longer. Watch what happens with crypto as the people with big stacks get into their 30's/40's. And after the next boom bust cycle, remember this post.
I post a novel piece of information that gives away by-asset macro market cycles Crickets Biz man
Josiah Lewis
I'm guessing you're pretty new to trading OP.
Thomas Russell
>kids are moving crypto markets yeah no
Alexander Murphy
Very interesting post op
Tyler Brown
aaaaaaaaaaand it’s another midwit. move it along folks. nothing to see. beginners can stay.
Joshua Thomas
Where the fuck did you get a picture of my toilet?
Jayden Sullivan
Started with a hypothesis then looked into fMRI data to find age ranges for remodeling then tested it across various markets that had at least minimal data for median investor age.
It works.
I'm not stupid enough to be a trader. Read OP again.
Jeremiah Clark
Nothing in that post was insightful or interesting and the bit about young investors vs older investors was just straight up nonsense.
Blake Gray
This is exactly incorrect and antithetical to my post. Can you read? Good for you.
Mind blowing, so we should buy low and sell high. If what you are saying is true we can expect prices to fluctuate over time going from low to high and vice versa. Instead of utilizing the power of compounding interest we could time the market and see even higher returns than with time in the market.
Please He didn't read and understand the post. If you used a very mild log axis and an asset class with a known linearly progressing median investor age you see the light. This is more of a piece of information that has high utility when making decisions where there are a few good options and you want to know which is best.
For example: let's say you have a good income and are DCAing into three different asset classes. Because you're smart and disciplined, you have a lot of each of those asset classes already and have a lopsided portfolio because one of the three has outperformed in the recent past. If you're looking to adjust your fiat allocation to balance your portfolio, this is a good tool to use to maximize gain while keeping the decreased volatility of diversification.
Jacob Robinson
See my post below. If you think I'm just telling you to buy low and sell high you're missing the point.
Joshua King
>The market can be highly dependent on emotion Here's my hot take: the market is ONLY dependent on emotion. You can gather all the data you want, charts, numbers, whatever - but in the end, what makes people buy and sell is the way they FEEL about that data. As you correctly stated, what makes you buy or sell is the memory of the pleasure of gains and the pain of loss. But this is valid to everything in life. Your brain doesn't work differently regarding financial markets that it does regarding anything else in life.
Isaac Gonzalez
>very mild log axis better yet, variablize the log axis so it can range from mild to hard core, then and add a sinusoid to tune it. also, add some decomposition while youre at it because its not just the market participants average age, but also the number of participants that affects the cycles. just one of the two being constant will fit your hypothesis perfectly.
Brayden Jenkins
You are missing the poster.
Jeremiah Foster
Nice theory. I’m already in my 30s and definitely don’t trade my crypto ever. Learned that lesson in my 20s. Holding in crypto is very similar to riding the emotional waves of my 20s stock trading but I have the resolve now to stick with things I believe in because historically whenever I sold something I believed in I wound up regretting it. Anecdotally I align with your theory as someone who has been trading assets for the last 15 years.
Daniel Lewis
I actually like this theory, I'm sure this has some relevance on markets for sure
Matthew Hernandez
Again, the fundamentals of a market determine how susceptible it is to emotion. Milk and gas prices react very differently than btc to short term news. That's reasonable. Another thing I noticed when looking at some of the smaller asset classes is that the median age of wealth held in asset is what matters (as you would expect) not the median age of all investors. In other words if 1bn teenagers with 50 bucks to their name enter the stock market, it won't affect the periodicity of market cycles much but if a few rich boomers enter the crypto market it will. Perhaps I am. I think very similar things about myself though I've been immunized against most trading by watching smart friends go down that path and fail.
Elijah Smith
>Milk and gas prices react very differently than btc to short term news. Absolutely, but concepts like supply, demand and elasticity only reflect people's emotions. In the end, an economy is only the way everyone feels like using their money. I unironically learned this lesson watching South Park years ago. Season 13, episode 3. Check it out.
Jayden Martin
>Another thing I noticed when looking at some of the smaller asset classes Show your data. Show where you are getting reliable data on the age of a person making a particular transaction.
Fucking lmao congrats on picking a very appropriate image in the OP.
Noah Morris
Market cycles don't exist anymore, infinite QE has ushered in a new paradigm. Sorry OP, technology has caught up to your theory. This time it's just different.
Juan Mitchell
>median age of wealth held in asset yeah youre right. i guess rather than say "age + number" of participants, its better to put it as "age * weighted by influence". as the asset class gets larger, decomposition doesnt show a clear cycle because i think the "influence factor" gets dispersed
Bentley Green
Your hypothesis makes sense but I'm not sure there is necessarily as great of an age demographic shift in investment. I also believe the wisdom of not timing the market comes less from people's lack of understanding about cycles and more from externalities that become variables e.g. bat soup.
