INTERVIEW
These Are The Cycles Of Our Lives
Ian Gordon Of
The Long Wave Analyst
by Jayanthi Gopalakrishnan
If this recession seems like it's going on forever, Ian Gordon of The Long Wave Analyst newsletter will give you good news and bad news. First, the good news: It won't last forever. The bad news: It's going to hurt a lot more before it gets better. The good news: More likely than not it will only happen once in your lifetime. The bad news: The same goes for that phenomenal bull market that just passed. And Gordon has more to say, including warnings about the probable collapse of the worldwide economy.Ian Gordon was educated in England. He attended the Royal Military Academy, Sandhurst, and was commissioned into the Cameronians (Scottish Rifles). He resigned his commission in 1967 and emigrated to Canada that year; he has been in the Canadian brokerage industry since 1983. He is currently a vice president at Canaccord Capital in Vancouver, BC. Gordon, a long-time student of Kondratieff's economic cycle, began writing his newsletter The Long Wave Analyst in 1998; the newsletter now reaches some 4,000 readers worldwide.
Editor Jayanthi Gopalakrishnan of STOCKS & COMMODITIES spoke with Gordon on February 25, 2003, via telephone.
The bear market in stocks started long before any threat of war in Iraq. The whole reason for the bear market in stocks is the significant malaise in the US economy, which is only going to get worse.
You're a big proponent of the Kondratieff wave. Could you tell us what that is?
As you know, Nikolai Kondratieff was a Russian economist who discovered a long economic cycle, and he wrote his thesis about this wave theory in the mid-1920s. He was a capitalist at a time that capitalists weren't viewed favorably in Russia. Ultimately, he was banished by Josef Stalin to a gulag, where he died in the 1930s.
What did he discover?
Basically, what he wrote about was this long economic cycle of approximately 60 years. He theorized that the cycle went through a period of expansion and a period of contraction, roughly half and half - so 30 years of expansion, and 30 years of contraction.
You look at it as smaller cycles of inflation and deflation within the larger cycle, correct?
I've incorporated an investment cycle within the economic cycle that Kondratieff wrote about. I think breaking the cycle to resemble the four seasons of the year is apropos. It makes everything quite clear. So the start of the cycle is the spring, and in the spring, of course, the economy starts refreshed. During spring, inflation is always benign. Then in the summer, the economy starts to bloom and produce fruit, and that's always the inflationary period of the cycle. The autumn is considered to be a feel-good period, when even though the appearance of things is good, the economy is starting to break down and debt becomes a massive burden. Then winter is the time when the economy has to pay back debt so it can start anew, refreshed, in the spring. By describing it this way, you can always tell which part of the cycle you're in. You always know when you're going to go into the autumn part of the cycle, for example, because there are four events that anticipate that.
...Continued in the May 2003 issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the May 2003 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2003, Technical Analysis, Inc.
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