We know that financial markets are obsessed with the short term. Indicators are usually judged on their performance over a three-month period. Lots of hedge funds think in terms of milliseconds.
On the opposite, others argue that history is subject to “long waves” that cause economies and markets to change direction at regular intervals. Roger Babson, an investment adviser who predicted the 1929 crash, claimed the markets were driven by Newton’s third law of motion: every action has an equal and opposite reaction. Mind you, he also wrote a pamphlet entitled “Gravity—Our Number One Enemy”.
It seems plausible that certain forces—new technologies or discoveries, demography, changes in climate—will have an effect over an extended period. But the idea that these cycles are preordained to run for a set number of years or months is much more difficult to accept. It is an odd kind of historical determinism, in which individuals are all just extras in a massive film production, doomed to stand on the sidelines as the script plays out.
To read more I propose you this link from The Economist : Economies and Market may at the mercy of long term forces.
