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Readers reviews of The Great Wave

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Traders who believe there are cycles in the market that repeat regularly will not want to read this book because it thoroughly debunks the idea of repeated cycles in economic or market history. This book is based on detailed research stretching back to Medieval times. The last half consists of additional notes, research sources, exact explanations of how price series were calculated and more detailed discussions of points raised in the first half. This is a scholarly book with the first half acting as a detailed overview.

 

Fischer explores the great waves of price equilibrium and price disequilibrium that have occurred. Each of these waves is remarkably different in the time taken to complete. Some have been as short as 80 years while others stretch for 180 years. The idea of a Kondratieff wave gets a mention only to show just how false are its assumptions and how irrelevant it is to the actual course of events. It, and many other popular theories followed by some traders and market commentators are clearly out of step with reality. Markets may be cyclic in nature, but they lack the regular, repeated precision necessary for a cycle to exist. Instead a repeated wave is a better explanation that fully describes the facts.

 

The core of Fischers exploration is the stability of the rate of change where there are increasing magnitudes and expanding amplitudes of change. The same character of development is evident in the Fourteenth, the Seventeenth, the Eighteenth and Twentieth Centuries. Four, Seven, Eighteen and Twenty - not much of a cycle here, but certainly the growth of a wave of price changes based on population growth, inflation and consumer choices. The relationship is complex, but interesting reading.

 

This is not a book about trading techniques, but it does help us understand the nature of the change and markets we work in. It also helps us to understand why an attempt to impose cyclic and predictable order on a chaotic system is ultimately a wasted exercise. It may help some traders to avoid mistaking co-incidence for correlation.

 

 

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