If successful prediction is a sign of good science, Michael Alexander, who in his previous book "Stock Cycles: Why Stocks Won't Beat Money Markets over the Next Twenty Years" predicted poor stock market returns for twenty years beginning in 2000, has impressive scientific credentials. In his second book, he synthesizes the theory of stock cycles and innovation waves developed in his first book, with a generational cycle based on the idea of birth cohort peer personalities, a Kondratieff social stress cycle, a world power cycle and a political cycle to describe a single operative cycle that is currently approximately 72 years. The analysis is very quantitative (but fairly easy to follow) and relies quite a bit on statistical significance testing, something that is understandably lacking in most long cycle research (there aren't generally enough cycles to test for statistical significance). Alexander's tying together of several independently constructed cycles to rise to statistical significance is perhaps his most important contribution. But there are several other contributions here including his use of a tool called reduced price that he uses to show that the Kondratieff Cycle that appeared to have ended around mid-century 20th century is actually still operative. I highly recommend this book for investors, history buffs or anyone who loves a good intellectual puzzle. Some readers may be put off by the more speculative arguments, but the scope of subjects covered here should appeal to almost anyone.
I give my highest recommendation to this book. I found it to be well-researched, very rigorous, and the conclusions very convincing. As also stated in his previous book "Stock Cycles...", he said (paraphrase) that the true test of the validity of his conclusions is to observe how events in the future unfold. So far, he is right on!! Michael, if you're reading this, will you please write another book or offer those of us who admire your work a means to keep up with your current thinking? Jim
Economists and historians have long been fascinated the apparent cycles in the various branches study. The analyses range from the purely literary, such as David Landes' "The " Great Wave', to fairly technical, such as Sumru Altug's recent 'Business Cycles" Alexander advances an interesting hypothesis that generations have uniifying characteristics, The Baby Boomers or the Greatest Generation (at my age, I like that one), usually driven by a reaction to the previous generation. I think he tries to make the relationship too tight; he has neat limited succession of generational types tied to his readings of the course of history. An interesting conribution, but men will continue to puzzle over a cycle tha may not exist.
I bought this book after reading Strauss and Howe and their generational cycles theory. I started researching other cycle theories, such as Kondratiev's. I bought this book because it represented an attempt to review, compare and contrast several theories. Mr Alexander has done a good job of trying to merge some of the financial and sociological oriented theories. Be aware that this book has an academic slant with references to math and statistics and not many funny anecdotes. If you are interested in cycle theories of human history and don't mind that it reads like a PhD dissertation, then this book is for you.
Buying stocks when this book was published was one of my best investment moves. The Dow recently went over 14,000, about 30% over the Dot Com peak. Since the October 2002 when the Dow was yielding almost 5%, the market is up almost 100%. Money markets certainly did not beat stocks.
Ironically, had you bought high quality - high yield stocks any time after the March 24th 2000, Dot Com peak, you would have easily out performed money market funds. This was during a time when the NADAQ fell almost 90% and 9/11.
Attempting to base the Kondratyev Cycle on demographics or other such foolishness does a huge disservice to Mr. K. Anyone familiar with Schumpeter's work on the Long Wave easily recognizes the signs and the fact the Long Wave once again is right on track. Mike and I had numerous discussions back in 1998-2000 on the Long Wave. He said if I was right and he was wrong he would issue me a public apology. So far with the Dow making new highs I have yet to receive one.
One should read economics books after they are aged. Reading this one now shows where the author went wrong and validates the Long Wave as having remained a consistent 53.3 years in length with no variation from technology, demographics or globalization.
Eric Von Baranov - CEO The Kondratyev Theory Letters