Benner Cycle: The theory that has predicted economic crises for over a century

Have you ever wondered if there is a mathematical formula capable of predicting market movements? The Benner cycle offers exactly that: a method developed nearly 150 years ago that remains surprisingly relevant today.

The origin of a revolutionary theory

It all started with an Ohio farmer who faced bankruptcy during the panic of 1873. Samuel Benner, instead of giving up, decided to investigate what had caused the financial collapse. His obsession with understanding economic cycles led him to write “Trends and Phases of Business” in 1875, a work that would change how many analysts understand markets.

Benner observed that his agricultural work followed natural patterns: the seasons affected the harvests, which in turn influenced supply and demand, directly impacting prices. Extrapolating this logic to the financial market in general, he discovered that the economy also responds to predictable cycles. Chance or fate had it that these cycles coincided with the 11-year solar cycle, giving his theory a scientific basis.

The structure of the cycles: three key phases

Benner divided market behavior into three distinct periods, each with unique characteristics and opportunities:

Panic phase: During these periods, extreme volatility dominates the markets. Investors make impulsive decisions driven by fear or euphoria, buying or selling without rational fundamentals. Prices fluctuate drastically, generating both catastrophic losses and extraordinary gains for those who correctly identify the direction of the movement.

Years of prosperity: These are the moments when prices reach their maximum potential. Benner recommended that investors take advantage of these periods to sell their positions at the best values. It is the time to realize gains before the cycle changes again.

Depression phase: Contrary to what many believe, these are not times to abandon the market but to build. Benner advised accumulating assets at low prices during these phases, holding positions until the next expansion phase, when they could be sold for significant gains.

The numerical cycles that predict the future

The beauty of Benner’s analysis lies in its mathematical precision. He identified an 11-year cycle in the prices of agricultural commodities like corn and pork, with peaks every 5 or 6 years. But his most valuable discovery was the 27-year cycle for iron prices, where lows occur every 11, 9, and 7 years, while highs appear every 8, 9, and 10 years.

These patterns are no coincidences. They reflect real macroeconomic cycles that continue to affect modern markets, including Bitcoin and other digital assets.

How has Benner been accurate for over a century?

Samuel Benner’s legacy is solidified when we examine his historical predictions:

• Great Depression of 1929: His theory correctly anticipated this massive collapse
• Dot-com bubble (2000): Benner’s cycle pointed out the correction that would come
• COVID crisis (2020): Once again, the theory demonstrated its predictive capacity

Today, according to Benner’s cycle analysis, we are in a relative depression phase where asset prices are compressed. For disciplined investors, this presents an opportunity window: the ideal moment to accumulate before the next expansion cycle raises values again.

A lesson that transcends time

Samuel Benner’s legacy goes beyond mathematical accuracy. It represents a fundamental truth about markets: history repeats in cycles, and those who understand these patterns can make more informed decisions.

Whether in traditional markets, commodities, or cryptocurrencies like Bitcoin, the Benner cycle continues to offer a valuable framework for understanding when to buy, when to sell, and when to simply observe. His 1875 work remains, in many ways, a “sure thing” in a financial world full of uncertainty.