Thirteen Year Schematic

As published at Market Oracle, David Banister's thirteen-year bull-market hypothesis shows a good understanding of how bull market grow:

The first five years from 2001-2006 was the “stealth bull” in Gold and Gold stocks. The average Gold Fund ran up 30% a year for five years compounded. By the time investors figure this out, they all pile in right near a five year peak. The market then chops for three years sideways in an up and down fashion, getting nowhere. Investors get bored, and then we move into the final five year stage where awareness takes hold and the bull cycle really takes off.

The final five-year stage is one where the previously-vocal bears get worn down into silence, and formerly skittish bulls turn full-throated and impervious to declines. He thinks that we're in the beginning of the third stage, where skepticism and skittishness still prevail. The disappointments in the second stage add to bulls' frustration.


Interestingly, he compares the present bull market to tech's from 1986 [the year of Microsoft's IPO] to 1999. If he's right on the timeline as well as the third-stage pegging, then exploration stocks will be as wild in 2013-14 as Internet stocks were in 1998-99.

This year corresponds to 1995; last year corresponds to 1994. There was a tech mini-bubble in '95 and '96 as a few early-Internet IPOs caught fire; Yahoo! went public in April of '96. This mini-bubble did deflate somewhat in '97 before coming on stronger in '98. [You'd have to be either tech-market trivia lover or have a very long old-hand's memory to recall Spyglass, the company behind Mosaic.]

The gold market, however, moves to its own beat. The above schematic shouldn't be taken that literally.