Does Small Business Cycles Mimic The Financial Market Cycles?
Small Business and Market Conditions
I’ve been acutely infatuated with the conditions in which I observe vehicles on the road during various market cycles. I’ve taken notice and have determined that there is a correlation between the vehicles I observe through my car window while driving, and financial market cycles.
According to the Small Business Administration approximately 51% of the businesses in 2002 were small businesses. In 2009 47% of businesses were run by small businesses. In 2015 (almost 7 years later) the number of small businesses approached 50%.
You may be thinking a 3% to 4% swing does not mean much, but when dealing in the thousands those numbers start to make a difference. So, what does small businesses have to do with traffic and market conditions? The statistics mentioned above is a small sample reflecting the cycles small businesses go through.
These small business cycles mimic the recent financial market cycles. For instance, just a couple of years prior to 2009 there were several small business vehicles on the road….Joe’s Pluming, Sandy’s Fix IT service, and Stop Yo Pest just to name a few.
Theses Company’s and other similar companies were prevalent in my everyday commute to and from college and work during that time. However, as we all are aware 2008-2009 came and the financial markets had a down turn. Thus, the four percent decrease in small businesses.
The decrease in small business vehicles can be directly related to the businesses that went out of business. Fewer small businesses equal less small business vehicles on the road. Now this is not to say that all small businesses went out of business in 2008-2009, but small business and large business reduced staff and trim where they could to stay in business.
Now fast forward to 2014-2015 and the small business numbers increased by 3%. And guess what you and I seen more of while driving to our various destinations. Small business vehicles are not hard to miss.
Majority of the time the vehicles are newer model trucks, vans, or cars with the company’s freshly printed logo on the side of the vehicle.
Prediction
In my opinion the current financial market is due for a correction, and the bears (a market in which prices are falling, encouraging selling.) will start to show. Further, dragging the market lower due to the increased selling and encouragement from various sources to sell sell SELL!!
Now if you are reading this in the future and I happen to be correct leave me a comment below, and tell me your thoughts or if I’m wrong let me know just the same.
However, if my prediction is correct we would see the 2014-2015 increase in small businesses turn to a decrease in small businesses; directing resulting, in a decrease in small business vehicles on the road. Now what purpose does this serve to the lay investor? This may very well be rather small detail to pay attention to, but if continues to hold true to the initial principle this information may be very useful.
Therefore, in short this information (with other market indications) can be used to better time the market and perform contrary to the majority on the market. When the news broadcaster and every investment channel and station states now is a good time to buy or sell then perform the opposite of what the mass majority of individuals are taking part in.
The name of the game is to buy low and sell high. The better investors look at the market as a whole, and dive into various particulars the better off the investor will become when deciding when to buy and sell.
Let me know your opinion, and share any ideas for detecting financial market cycles.
