The Cycles of History

There is never a more mysterious and controversial market forecaster as William Delbert Gann (1878-1955). An independent representative of Ticker and Investment Digest, a famous financial magazine of Gann’s time, verified his amazing ability of financial forecasting, “I once saw him take $130, and in less than one month run it up to over $12,000. He can compound money faster than any man I ever met.” In addition to this, Gann had also predicted many events outside of the stock market, like one World War and the elections of many presidents like Wilson and Harding.

Gann had never revealed his method to the public, but he had given hints about the secret which made his predictions so stunningly accurate. In his book The Tunnel Thru the Air (Gann, 1927), he spent two entire chapters to explain the philosophy of his science of prediction. In essence, it is based on the belief that there is nothing new under the sun, and history repeats again and again:

Some time ago an article appeared in the New York American commenting on the writings of Sir Arthur Evans, foremost English archaeologist, who published "The Palace of Minos,” a book concerning the ancient City of Minotaur. He described the excavation on the Isle of Crete in the Mediterranean Sea, in which they found modern apartment houses, bath tubs and corsets, the same as used today. The plumbing that they found was so excellent that it is still working after thousands of years. It is estimated that the ancient city was destroyed over 5000 years ago, or about 3500 B.C. The fact that a long time elapsed before apartment houses became popular again is another proof of history repeating itself and shows ‘there is no new thing under sun’ but that we simply resurrect the old ones.

Therefore, by studying the cycles of history, one is able to predict the future:

In making my calculations on the stock market, or any future event, I get the past history and find out what cycle we are in and then predict the curve for the future, which is a repetition of past market movements. The great law of vibration is based on like producing like. Like causes produce like effects. Wireless telegraphy, the phonograph and the radio are based on this law. The limit of future predictions based on exact mathematical law is only restricted by lack of knowledge of correct data on past history to work from. It is just as easy to figure 100 years or 1000 years in the future as one or two years ahead, if you have the correct starting point and know the cycle which is going to be repeated.

How do I forecast future cycles?” You may ask. In order to forecast future cycles, the most important thing is to begin right, for if we have the right beginning, we will get the right ending. If we know the cause of the effect, then there can be no doubt about predicting the future event or effect.

Then he gave numerous historical examples to support his theory. Two of the greatest cycles are the millennial and bi-millennial cycles:

If we go back 1000 years, we can find ample proof of how history has been repeating itself in the past few years. From about A.D. 916 to 923 Europe went through about the same conditions that prevailed 1000 years later or around 1914 to 1920. During the first period referred to, Europe experienced wars, panics and crop failures. History shows that, in 916, agriculture in the British Isles was at its lowest ebb and that there was great scarcity of wheat and corn. Very few people were engaged in tilling the soil on account of wars. The same conditions prevailed 1000 years later in 1916 and 1917, when this country was called on to furnish food to starving Europe and send men and money to save their armies from defeat. In 917, Constantinople was besieged by the Bulgarians and war continued to 919. We know that war prevailed in Turkey and all over Europe between 1914 and 1919. In 923 there was Civil War in France and 1000 years later, or in 1923, France again had her troubles and is still having them.

Another proof of the 1000- and 2000-year cycle is evidenced by a lecture given by Professor Hans Delbruck of the University of Berlin at the University College of London, just before the outbreak of the World War in 1914. He said:

One of his first observations in comparing the phenomena of the history of wars in the different ages was the likeness between the battles in which the Swiss conquered Duke Charles the Bold, and the battles in which the Greeks overcame the Persians. They had in an interval of 2000 years exactly the same arms and the same political institutions fighting against each other.

Another important cycle is the centennial cycle:

What proof of the 100-year cycle do we get from 100 years ago of what has happened in the past few years? In the United States, between 1814 and 1822, we had crop failures, war and yellow fever, especially from 1819 to 1822. In 1821 Persia was visited with Asiatic cholera. In 1823 cholera broke out in several ports along the Mediterranean. During the same period, corresponding to 100 years ago, the United States had the terrible epidemic of influenza, and in Europe, Russia was visited with famine, cholera and all kinds of dis eases, killing millions. In 1822 there was a famine in Ireland and 100 years later they were winding up their troubles and trying to make settlement and peace with England. In 1922 China and Russia were both suffering from famines, another proof of the 100-year cycle. Some more important evidence of this cycle is found by going back 100 years in history, in which we find that in 1819 the first steamship crossed the Atlantic Ocean. In 1919, 100 years later, the British dirigible R-34 made a successful flight from Scotland to Mineola, Long Island.

Unfortunately, while Gann had clearly invested a lot of time in studying the human history, he never explained how it could be directly applied to the stock market. Some people suspect that he used exotic methods like numerology and astrology, while others think that he was a marketing genius who successfully pretended to be someone who could tell the future. Regardless of all these, it is interesting to note that the prosperity of humankind goes through peaks and troughs just like the stock market does, the cycles in human history are a great source of reference for prediction makers.

Reference: Gann, W. D. (1927). The Tunnel Thru the Air: Or, looking back from 1940. New York, NY: Financial Guardian Publishing Co.