2023, A Year of the Bear, or the Bull going to Rule

In 1910, a man named George Tritch from Denver made a projection of future economic cycles in the timber industry. Tritch claimed that these cycles followed a systematic pattern, and his prediction turned out to be amazingly accurate. The projection was published in the Timber Trades Journal, and it has been used to analyze the potential investment returns of a $100 investment in the S&P500 in 1911.

The projection was used to create an investment strategy that outperformed a buy-and-hold strategy on the S&P500. The investment strategy involved selling all stocks in the beginning of peak years and buying them back in the beginning of bottom years. Two calculations were made, one assuming no interest yield during out-of-stock-market seasons, and another assuming a fixed income target of 10-year US Treasury debt during those periods.

The results showed that the "Tritch strategy" outperformed the buy-and-hold strategy on the S&P500. A $100 investment in the S&P500 in 1911 would be worth around $27,000 today. However, the investment would have been nearly five times higher if invested based on the Tritch model. It should be noted that interest yields during bear market seasons significantly affected investment returns. Without achieving those gains, the return would have only been about 25% of the holding period return of the S&P500.

The projection ends in the year 2023, but the author drew a model to continue until the year 2073. The model shows when to invest in the stock market and when to invest in fixed income. The author suggests that investors should invest in the stock market during ascending slopes and invest in fixed income during descending slopes. However, it should be noted that history is never a guarantee of the future, and investors should make any investment decisions based on their own risk tolerance and financial goals.

In conclusion, the Tritch model has been shown to be an effective investment strategy in the past. However, investors should remember that investment returns can never be guaranteed, and they should consult with a financial advisor before making any investment decisions.