Early on in my
life, as I was studying to be an electronic engineer, I documented that I saw a
particular result of all energy systems that happened over and over again. I
called it the Law of Cycles because every system in which an energy component
was present exhibited a reversal component causing the system to display a
"cycle". And this cycle continues back and forth until reaching equilibrium, or
an outside influence added energy to the system to enhance the value to the
system's exhibited cycle. In electronics we learn that a plotted result of any
electronic signal will exhibit an increase in amplitude, until it reaches
resistance, then decreases and
passes through equilibrium, goes negative until reaching
resistance and reversal. This continues with decreasing amplitude until
equilibrium, or a plotted straight line. In electronics, this is sometimes
referred to as "ringing". The lost of amplitude is attributed to heat created
from the loss of energy in the system.
observation was that all systems exhibited this same behavior; day and night,
ocean tide, a swinging pendulum. All energy systems exhibit this character. A
plucked guitar string, or even a rubber band will exhibit this characteristic,
eventually becoming still, unless it was plucked again.
applied this Law of Cycles to trading commodities, which helped me to understand
actions in the market. It is obvious to me as a trader that this system of
thousands of people trading does in fact exhibit this same law. However, in
researching this phenomenon, I was unable to find a documented law.
I did find this white paper by
by Michael McGinnis,
published on the
Internet which expands my explanation.
A law is anything we see that happens over and over again in nature. Some laws
are pretty simple, like the law of gravity, which says that all objects feel a
force of attraction for other objects. You don't have to go to school to know
about this law. Even young children soon learn about gravity if they fall from a
Knowing that a law exists is very helpful, because it helps to know what to
expect. One law that we have neglected in our society is the law of cycles,
which says that events happen in a repetitive way with a time of increase,
stability, decrease and then increase again.
Our ancestors knew the law of cycles much better than we do. They knew that in
some years there was lots to eat, and at other times there might be starvation.
That some years were very mild, and some were very stormy or cold. That many
animals such as hares go through dramatic population cycles, building up
gradually to a high level, and then crashing to a low point to start rising
again. But that whatever condition you had, they knew that nature's clock would
bring them to the other side of the cycle when the condition would change.
Nowadays, we tend to lose sight of this basic law of nature. In this century we
have grown to rely on our national government and our technology. We have begun
to believe that our standard of living, our income, our health and our
well-being should always improve. And many of us are surprised and angry when
the government cannot reverse economic downturns, or improve the health of the
people or prevent the average person's income from falling from what it was 10
years ago. Our technology has been able to reduce or delay the effects of the
law of cycles, but the law is still operating.
If cycles are an inevitable part of life, how can we use this to advantage?
First, by not complaining when costs rise, income falls, the days get shorter,
people get sick or have several examples of 'bad luck' in a row. According to
the law of cycles bad conditions will improve, so patience is better than
complaint. The idea of cycles shows the importance of timing. When times are
good it is wise to prepare for times of difficulty. Governments have found it
difficult to follow that advice, but there is good reason for individuals to do
this, and many people do.
The other advantage of timing with cycles is that our abilities and talents can
also rise and fall over time. We try to pick a time when we feel physically
strong to do demanding, strenuous work. We buy a stock when we see its value
rising. Even events like meetings can go through positive and negative phases.
If this is recognized in advance, it could be possible to stop a meeting when
people are getting tired and have more difficulty finding agreement, and meet
Discussing the law of cycles may be especially appropriate now. People have
become used to steadily increasing government spending, both federal and
territorial, and there may be some shock and anger over spending cuts. However,
it is doubtful that governments know why our society behaves as it does, any
more than the hare population does. A law can only be turned to human use when
it is recognized and taken into our planning. And so both the human and hare
populations will continue to be affected by the law of cycles for years to come.
But the hares will feel the full effects of cyclic upturns and downturns, while
we — if we use our knowledge of cycles to advantage — can turn potential
problems into opportunities.