Financial Storms (Recessions and Depressions) versus Storms at Sea (Hurricanes, Tsunamis, Monsoons, Typhoons, and Cyclones)

For the last two centuries, there have been numerous financial storms and hurricanes. Most investors think of the Great Depression as the only negative period in financial markets. However, there were numerous financial storms similar to hurricanes. The first major depression transpired in 1837 and lasted 5 years. The Long Depression or Panic of 1873 lasted 65 months. The Great Depression of 1929 (which hit in two waves) lasted a total of 55 months. Recessions, like the one that started in 2007, are more regular but can be equally devastating. There were at least a dozen recessions over the past century. Recessions are not too dissimilar from hurricanes; they range in size, duration, and frequency, and they can inflict damage. They are erratic but are guaranteed to happen. Financial storms are nothing new. From 1901 until 2009, there have been 23 depressions, recessions, negative events, and/or market turmoil. During this same time, there were 28 hurricanes. On page 41 of Wave Theory For Alternative Investments in “Surfing Alternatives Waves”, I compare financial storms (recessions and depressions) to storms at sea (hurricanes). Frequently, negative occurrences with the financial marketshurricanes, tsunamis, cyclones, monsoons and typhoons. A stock market correction is measured in performance declines, duration, and market peaks or troughs while hurricanes are usually measured in terms of categories, fatalities, or wave heights (Table 2.6). The similarities are strikingly uncanny. Hurricanes, like financial markets, move in waves. The Chicago Mercantile Exchange (CME) started trading futures contracts linked to the CME Hurricane Index (CHI). The CHI uses both wind speed and size to measure a hurricane’s potential for damage. Hurricanes move with great speed. Contracts expire at the end of every hurricane season and offer protection or a way to measure against a hurricane such as Katrina. Even hurricanes not as destructive as Katrina can generate large waves: Hurricane Bill, energized by warm ocean temperatures, agitated the North Atlantic like a giant plunger, creating waves up to 28 feet near Bermuda, which could go as high as 47 feet in the open sea today according to officials. are followed by storms at sea:

-Pages 38-44, Wave Theory for Alternative Investments

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3 Responses to Financial Storms (Recessions and Depressions) versus Storms at Sea (Hurricanes, Tsunamis, Monsoons, Typhoons, and Cyclones)

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