This is the Benner Cycle chart, a market forecast created back in 1875 by Samuel Benner.
It claims to predict the best time to buy and sell in the market.
But I’m going to test it in this video to see if it actually worked.
This chart was designed as a long-term roadmap for investors.
But the creator, Samuel Benner, was not a Wall Street analyst, a banker, or an economist.
He was an Ohio farmer who found himself on the wrong side of a massive economic crash.
In the crash of 1873, like many others, he lost a lot of money.
But unlike others, he started analyzing things to figure out how the market moves.
He believed that the up down moves of the market were not random but followed a predictable, cyclical pattern.
In 1875, after years of study, Benner published his findings in a book.
Inside this book was this famous chart.
Basically, the top part shows the years when the market is too high and will start moving down.
The bottom part shows the years when it’s a good time to buy.
The market will be at a lower price during these years.
The middle B line shows years when it’s a good time to sell the previously bought things.
The main thing it’s saying is that the market will be too high and will start falling in the years mentioned in the top part.
The market will be at lower prices and start moving up in the years mentioned in the bottom part.
Benner was so confident in this cyclical pattern that he used the words “sure thing.”
Well, let’s test it and see if the market actually moved like he predicted.
I tested it on the S&P 500 stock market index from 1924 to 2023, as those are some of the years mentioned on his prediction chart.
I changed the chart to a logarithmic chart.
This makes comparing old prices with current prices much easier.
So after testing all his predictions, here’s what I found.
Did the market go down enough in any of the years he mentioned?
Well, out of six panic predictions, only one time was he correct.
But what about the lower price predictions?
Was the price relatively lower in the years he predicted?
Well, out of twelve predictions, only six were correct.
I wasn’t completely sure about the 2005 prediction.
The price was lower compared to the 2000 all-time high.
But it had been moving up continuously for around three years.
So it was not lower compared to the recent movement.
For consistency, I counted it as a wrong prediction.
The correct lower price prediction would have been around 2002.
So out of eighteen predictions, he only got seven correct.
His win rate was around 38 percent.
If we count his prediction years as an approximation, then the win rate slightly goes up.
Like, the 1999 panic prediction becomes correct because the year 2000 was a market crash.
But overall, his market predictions were mostly random nonsense according to the data.
Do you think people saved his chart and followed his predictions?
There has to be at least one, right?
Thanks for watching.