[...] The chart below depicts a composite model of all identified cycles in the P/E Shiller data from 1900-2024. Notably, the "cliff" phenomenon, where all cycles synchronize their peaks at a single point in time, has only occurred in 1929, 2000, and now appears to be happening again in 2024.
Composite Cycle Analysis Model for the P/E Ratio of the S&P500 from 1900-2024 | December 6, 2024.
[...] The 42-Month Cycle has the highest strength and is the dominant cycle in the dataset. This 42-Month Cycle is generally significant for financial markets, as it has been identified across numerous financial assets. Let's take a closer look at what makes this cycle so special in this case. Starting with the current situation, the 42-Month Cycle has topped at major market peaks, such as the internet bubble in 2000, the financial crisis in 2007, and 2021. Additionally, the bottoms of this cycle have been synchronized.
42-Month Cycle in the P/E S&P 500 Ratio | 1900-1950.
[...] A cycle that remains remarkably stable in length and phase over 120 years is quite uncommon. As shown in the upper chart, the 42-Month Cycle is also currently reaching its peak and transitioning into a downward phase, which is expected to continue into 2026.
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