Based on information from search sources, the "Periods When to Make Money" map is a model predicting stock market cycles based on historical research. Below is a detailed analysis of its validity and effectiveness:
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### **1. Origin and Description of the Map**
- **Author**: This map is said to be based on the research of **George Tritch** (published in 1872) or **Samuel Benner** (published in 1875), but there is debate over who the actual originator is.
- **Content**: The map divides the market into 3 phases:
1. **Phase A (Panic Years)**: Panic period, market collapse (every 16–20 years).
2. **Phase B (Good Times)**: Growth period, should sell stocks (8–10 years after phase A).
3. **Phase C (Hard Times)**: Recession period, should buy (3–6 years after phase A).
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### **2. Effectiveness and Historical Evidence**
- **Predicting some major events**:
- This map is said to have predicted the Great Depression of 1929, the dot-com bubble of 1999, the financial crisis of 2008, and the COVID-19 pandemic (2019).
- Example: The "sell" phase is recommended in 1927 (before 1929) and 2007 (before 2008).
- **Backtest results**:
- **Buying in phase C and selling in B** has a success rate of **81.25%** with an average return of **32.12%**, but does not outperform the **long-term buy-and-hold** strategy. For example: From 1904–2023, the buy-and-hold strategy achieved **$62,414** compared to **$5,432** of the cyclical strategy.
- **Phase A (Panic Years)** has an accuracy prediction rate of only **37.5%**, indicating that avoiding the market during this phase may cause investors to miss significant recoveries (e.g., 1945–1951 increase of **57.23%**).
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### **3. Limitations and Controversies**
- **Lack of scientific basis**: No statistical evidence proving superior accuracy over other forecasting models. Some studies suggest this is merely a coincidence.
- **Difficult to apply in practice**:
- The **16–20 year** cycle is too long to optimize short-term profits.
- Markets often recover quickly after crises (e.g., COVID-19), making "avoiding phase A" risky.
- **Debate over origin**: Some documents suggest Samuel Benner is the true author with the book *"Benner’s Prophecies of Future Ups and Downs in Prices"* (1875), while George Tritch merely compiled it.
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### **4. Conclusion: Should we trust this map?**
- **Advantages**: Provides insights into market cycles, helping investors avoid certain risky phases (e.g., 2008).
- **Disadvantages**:
- Not reliable enough to serve as an independent investment tool.
- Effectiveness is far inferior to the long-term buy-and-hold strategy.
- **Advice**: Should be combined with fundamental/technical analysis and diversify the portfolio, rather than relying solely on this cycle.
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**In summary**, "Periods When to Make Money" is an interesting model but **not an absolute "truth"**. It reflects the human tendency to seek patterns in chaos, but its practical applicability is limited.