The GFC peak was off by one year instead of one year earlier in According to the timetable, will be the peak of the equities bubble, followed by a major crash similar to that of the Dot-Com bubble. He realised that the timetable would have to be recalibrated on the 25th December The updated timetable is amazingly accurate from that date onward, predicting the Dot-Com bubble peak in and its collapse. Gann managed to predict the crash of years in advance. Just like the Geoist land market cyclethere is a repeating year average between every major cycle. InGann constructed his financial timetablewhich tabulated the booms and busts, peaks and troughs of the US equities market. He concluded that equities exhibited a cyclical trend over decades and thus prices could be predicted long in advance. He was a successful and wealthy speculator, spending decades investigating patterns in equities markets. While the metrics noted above can accurately indicate the peak of an equities bubbles several months in advance, they cannot tell us anything years ahead of time.įor this, we must turn to the research of the original wizard of Wall Street, W. The yield curve inverted a few months before both peaks in and Currently, the yield curve is basis points above zero, and could take a while before it inverts. The yield curve is one of the best leading indicators of recession and equity market downturns. It should be noted that non-financial business debt is also used to speculate on commercial land, which is why land prices cycle in tandem with debt. The peaks in the annual change of non-financial business debt correspond with those of the equities market. As prices are often linked to executive remuneration, they have every incentive to engage in this unproductive strategy. Another metric to watch out for is private non-financial business debt because the very low interest rates on business bank loans makes it easy for corporate executives to drive up stock prices by loading up on debt to engage in stock buybacks. It is therefore worth closely tracking the trends in margin debt to understand where equity prices are heading. The name of the game is capital gains income is increasingly sidelined as yields become compressed to record lows. In the case of equities, the type of debt used is margin debt. Like all asset bubbles, the primary cause is speculators taking on debt to bid up prices to ever-higher levels, generating a stream of greater fools willing to purchase at inflated valuations. Despite the many predictions of collapse, the bubble has powered on unhindered. Residential and commercial real estate prices are growing strongly, along with equities. D Gann was a finance trader and wealthy speculator that spent decades investigating cyclical trends in equity market patterns and found that prices could be predicted long in advance. diy fashion blog: #diybfw day 6: phillip.