Tag Archive for 'Martin Armstrong'

The New Yorker Profiles Martin Armstrong, the Man Behind the Pi Cycle

Posted on October 10, 2009, 12:18 pm. Closed

The ContraHour blog points out that the New Yorker has a recent article profiling Martin Armstrong. It’s a very interesting article that informs the reader of Armstrong’s background, his beliefs regarding cycles, and how he got himself thrown in jail. The article also does a good job in discussing some of the behavioral biases of humans and whether or not the cycles we see are truly there or whether the human brain is just doing its job and desperately trying to identify patterns where none exist.

Armstrong began to observe that many things worked like this—that occasionally a contagion, of indeterminate origin, passed through the system, hitting one asset class after another. One summer, his father took him to Europe, and the web of foreign currencies gave him a tactile sense of interconnectivity and the oscillations that might come of it. The following year, Armstrong’s high-school history teacher showed his class the 1937 film “The Toast of New York,” about the Black Friday panic of 1869 and the gold speculator and con man Jim Fisk, with a young Cary Grant as Fisk’s accomplice. At one point in the film, Fisk quotes gold at a hundred and sixty-two dollars and fifty cents an ounce. Armstrong, aware that the price, in 1966, was just thirty-five dollars, assumed that the line was Hollywood nonsense. Prices could not possibly have fallen so far over the span of a century. He went to the library, however, and found, on microfilm, a contemporaneous reference in the Times to a gold price of a hundred and sixty-two dollars. It further demolished his youthful assumption that assets gradually appreciated over time—that markets were linear.

One day, in a newspaper, he came across a list of financial panics that occurred between 1683 and 1907. On a lark, he divided the span (two hundred and twenty-four years) by the number of panics (twenty-six) and found that, on average, there had been a panic every 8.6 years. As he read more, he began to suspect that 8.6 was a highly significant number. He discerned a recurrence of major turning points in the economy and in world afairs that followed a distinct and unwavering 8.6-year rhythm. Six cycles of 8.6 years added up to a long-wave cycle of 51.6 years, which separated such phenomena as Black Friday and the commodity panic of 1920, and the Second and Third Punic Wars.

asset class after another. One summer, his father took him to Europe, and the web of foreign currencies gave him a tactile sense of interconnectivity and the oscilla-tions that might come of it. The follow-ing year, Armstrong’s high-school history teacher showed his class the 1937 ?lm “The Toast of New York,” about the Black Friday panic of 1869 and the gold speculator and con man Jim Fisk, with a young Cary Grant as Fisk’s accomplice. At one point in the ?lm, Fisk quotes gold at a hundred and sixty-two dollars and ?fty cents an ounce. Armstrong, aware that the price, in 1966, was just thirty-?ve dollars, assumed that the line was Holly-wood nonsense. Prices could not possibly have fallen so far over the span of a cen-tury. He went to the library, however, and found, on micro?lm, a contemporaneous reference in the
Times
to a gold price of a hundred and sixty-two dollars. It further demolished his youthful assumption that assets gradually appreciated over time—that markets were linear. One day, in a newspaper, he came across a list of ?nancial panics that oc-curred between 1683 and 1907. On a lark, he divided the span (two hundred and twenty-four years) by the number of pan-ics (twenty-six) and found that, on aver-age, there had been a panic every 8.6 years. As he read more, he began to sus-pect that 8.6 was a highly signi?cant number. He discerned a recurrence of major turning points in the economy and in world a?airs that followed a distinct and unwavering 8.6-year rhythm. Six cy-cles of 8.6 years added up to a long-wave cycle of 51.6 years, which separated such phenomena as Black Friday and the com-modity panic of 1920, and the Second and Third Punic Wars.

Read the whole article. I thoroughly enjoyed it.