Socrates Fund Management was created in 2006 to offer investors access to unit trust fund management investment strategy based on Long Wave Theory.
Long Wave Theory looks at historical trends in market cycles of approximately 30-35 years per cycle going back hundreds of years. Long Wave Theory predicted the share market crashes of 1907, 1929, 1966 and 2000 and the bull markets in commodities that started in 1907, 1930, 1970 and 2001.
Share markets tend, historically, to go up for 16-18 years at a time and then go down for 16-18 years. Commodity markets do the same, but on opposite cycles.
The main benefit of investing in the 21st Century Renaissance Unit Trusts is investor exposure to these cycles. The Trusts have been designed to take advantage of long wave cycles.
After an 18 year rise from 1982 to 2000 traditional stock markets began a long term down cycle in 2000.
After a 19 year fall from 1982 to 2001 commodity markets began a long term up cycle in 2001.
Therefore the appropriate current strategy should be to emphasise hard asset commodity based investments and to reduce exposure to and/or use appropriate risk reduction strategies in traditional stock and property market investments.
As with all long term strategies, there will be times when these long term cycles correct, either when trending up or trending down. These downward corrections occurred in the last stock market up-cycle in 1983, 1987, 1991, 1994, 1997-8. Similar downwards corrections occurred in the current commodity market up-cycle in 2006, 2008 and 2001.
In the longer term these falls correct themselves as long as one remains invested in the appropriate long term cycle. We believe ignoring these cycles leads to great losses as happened in stock markets in the 1930-40's and 1960-70's and in the commodity markets in the 1980-90's.
Long waves in markets can be traced back hundreds of years but our strategy focuses on the last 140 years as researched by 2013 Nobel Prize for Economics winner Robert Shiller.
Shiller found that “There is no way to predict whether the price of stocks and bonds will go up or down over the next few days or weeks. But it is quite possible to foresee the broad course of the prices of these assets over longer time periods.”
Through his research Socrates' Managing Director identified the long wave down cycle of stock markets in 2000 six months before the cycle changed and identified the long wave up cycle in commodities approximately one year after it began in 2001.
As per the Long Wave cycles Socrates' current strategy is to focus on hard asset commodities. In particular we hold substantial investments in precious metals and related industries.
Socrates' 21st Century Renaissance funds have substantial gold and silver bullion in their portfolios. The Gold & Metals Unit Trust is the only PIE unit trust in New Zealand that specialises in gold and silver bullion and metals mining companies.
For more detail on Long Wave Theory see our Investment Philosophy.
We believe that history proves that an investment strategy based on Long Wave Theory is the best approach to investing.
Thus we created Socrates Fund Management unit trusts so investors can have access to this investment strategy.