The Business Cycle and the Rhythm of Life

Cycles: The Science of Prediction
By Edward Dewey and Edwin Dakin

Like it or not, everything; from the vastness of the universe to the most elementary of particles that comprise it, has a beginning and ultimately an end. All life forms within the confines of time and space evolve along a trajectory until energy is overwhelmed by entropy. Matter is then converted into pure energy and the cycle begins anew.

This evolution possesses a rhythm composed of beats, beats in time that upon analysis, provide perspective and orientation. Pinpointing these beats tells us where we are, where we were, and with a bit of intuition and experience thrown in, where we might be headed and when we might get there.

In the words of Edward Dewey and Edwin Dakin;

When we ask whether a business should expand, or whether its stock is a good investment, or whether it can better raise funds by selling stocks or bonds… the essence of our question is merely: where does the business stand in reference to its course of life? Every business has its rhythms. These rhythms, wrapped around its trend, combine to make a path that can be graphed like an orbit. We can discover these rhythms by analysis, much as we discover the separate rhythms in the tides.

“Cycles: The Science of Prediction” pp. 150.

This book was written in the 1940’s when the field of statistics was in its youth. It is a seminal work that compared the various cycles of business, growth, the stock market to weather and many other cycles that occur in nature. The conclusions the authors logically draw from their research demonstrates that our universe is built upon harmonics which are nothing more than overlapping wave cycles.

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