PREDICTIONS – 10 Years Later - Santa Fe Institute

8. A COSMIC HEARTBEAT
Concerning cycles with a period of fifty-six years I have cited examples
in this chapter that are based on physical quantities. Energy
consumption, the use of machines, the discovery of stable elements, the
succession of primary energy sources, and basic innovations have all
been reported in their appropriate units and not in relation to their
prices. The cycles obtained this way are more trustworthy than
Kondratieff’s economic cycle. In fact, in the case of primary energy
sources, prices indeed followed the same cycle by flaring up at the end
of each boom.
Related to money but more physical than prices are bankruptcies and
stock market plunges, which manifest themselves during the downward
trend of the energy oscillation and hence correspond to a downturn in
the economic cycle. Ever since I became aware of the fifty-six-year economic
cycle, my concern was not whether a Wall Street crash was
around the corner but rather what must one do when faced with an imminent
stock market crash. My calculations suggested a crash around
1985, and the minimum precaution to take was to stay away from the
stock market.
And so I did. For month after month I resisted the temptation to buy
stocks. Colleagues at work would get excited about the bullish market.
Favorable terms were offered for buying the company stock. People
around me watched their money grow daily. I kept quiet, hoping to be
vindicated by the eventual crash—but nothing came. Months went by
and the market was still growing. Years went by! Well into 1987, my
colleagues had all gotten richer while I was feeling rather sour.
I broke down. It was fall, the leaves were changing color, and I was
going to the mountains for the weekend with a friend. I had had enough
of holding back. I wanted to be like the others. Friday afternoon I called
my bank with an order to buy. I left for the weekend with a feeling that I
had finally escaped inaction. I had at last done something, something I
would look forward to on Monday.
Over the weekend, I enjoyed extraordinary scenery, good weather,
reasonable food, and friendship. But there were more important things
waiting for me back at work. Monday, October 19, 1987, the stock
market crashed. I was crushed. The amount of money I had lost was not
so important, but the pain was excruciating. At the same time, on another
level, my beliefs had been reinforced. The system had behaved
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