Samuel Benner and his legendary cycle: why do traders still use it to read the market?

Have you ever wondered why market cycles repeat over and over again? Samuel Benner, a 19th-century Ohio farmer, discovered the answer over 150 years ago, and his theory remains astonishingly accurate today.

The origin of the cycle: from farm to global market

It all began in 1873, when that year’s panic led Samuel Benner to bankruptcy. Instead of giving up, he decided to investigate why markets experienced these catastrophic crashes. As a man of the land, Benner knew that harvests followed patterns: there were years of abundance, years of scarcity, and transition years. Why not apply this logic to financial markets?

In 1875, he published his masterpiece: Trends and Phases of Business. In it, he revolutionized economic thinking by demonstrating that commodity prices, stocks, and assets moved in predictable cycles. Benner identified an 11-year solar cycle affecting agricultural productivity, and discovered that corn and pig prices followed this same pattern, with peaks every 5 or 6 years.

Even more fascinating was his discovery about iron: a 27-year cycle where minimum points occur every 11, 9, and 7 years, while peaks happen every 8, 9, and 10 years.

The three pillars of Benner’s cycle

Samuel Benner divided market movements into three distinct phases:

Extreme volatility phase (Panic years): These are periods dominated by irrationality. Investors act on emotions, not logic. Buying and selling happen in waves of panic, causing prices to fall to unexpected levels or rise excessively. Those who operate with discipline during these times can multiply their gains, but a miscalculation can be catastrophic.

Euphoria phase (Good times): During these years, prices reach their peak. It’s the ideal time to sell positions and secure profits. Assets are trading at their best prices, and investors see opportunities everywhere. However, Benner warns that these streaks do not last forever.

Accumulation phase (Hard times): This is where disciplined investors make their move. Prices fall, fear reigns, but it’s precisely the moment to buy quality assets at depressed prices. The idea is to hold these positions until the next boom phase, where they can be sold at all-time highs.

A method that has stood the test of time

What’s most surprising is that Benner’s cycle has correctly predicted the major financial events of the past 150 years:

• The Great Depression of 1929
• The dot-com bubble in the early 2000s
• The COVID crisis in 2020

For Benner, one thing was certain: markets always return to their fundamental cycles. He wrote about it with such conviction that his method has become a reference for technical analysts and traders worldwide.

Where are we now according to Benner’s cycle?

Applying Samuel Benner’s analysis to current markets, we find ourselves in a hard times phase, where asset prices are under pressure. According to his theory, this should be interpreted as a buy signal. It’s the time to accumulate positions in Bitcoin, BTC, and other long-term assets, hoping that the next boom phase will bring revaluation.

Benner’s cycle is not magic; it’s mathematics and observation of human behavior. And as long as market cycles continue to exist, his legacy will keep guiding investors who understand that patience and discipline are the true keys to financial success.