KLCI 10 Year Cycle

All markets have cycles. They will go up, peak, go down and then bottom. When one cycle is finished, the next one begins.

The same theory apply to our stock market. It is a fact in the stock market investing cycle, the key to making big money is to buy at the bottom and sell what you have at the peak.

Those who have experience with stock market investing know the boom and bust cycle the stock market goes through in Malaysia. Many analysts have their own time frame of the stock market investing cycle; some say 3 years, others say 5 years but to me, I can vouch for the KLCI 10 years calendar cycle. Let me explain in-depth with some events that had affected the Malaysia stock market in the past.

History of the KLCI

The modern day Stock Exchange of Malaysia was formed in 1964 and I have below, each of the 10 calendar year boom and bust stock market investing cycle which happened.

1960 – 1970

1969 – May 13 race riots in Kuala Lumpur sent the stock market crashing!

1971 – 1980

1974 – Arab oil embargo making oil prices shoot to all-time highs. This cause stock markets all over the world to crash due to very expensive oil.

1981 – 1990

In this period there were 2 major bust and 1 minor bust stock market investing cycle.

1985 – The Pan Electric crisis which saw the stock market close for 3 days and sending the market into a tailspin.

1987 – US Dow Jones Black Monday stock market crash. When the US market crash, our market followed them down!

1989 – China Tiananmen Square protests leaving hundreds dead and thousands arrested in China. Our stock market dropped sharply in sympathy with the protests and chaos.

1991 – 2000

In this period there was 1 minor bust and 1 major bust stock market investing cycle.

1991 – 1st Gulf War, Operation Desert Storm – it cause oil prices to spike and later stock market dropped sharply because of the war lead by the US against Iraq.

1998 – Asian Financial Crisis. Many companies suffered heavily and the stock market crashed leaving most investors with heavy losses. The worst stock market crash I’ve experienced since 1987.

2001 – 2010

In this period there were 2 major busts and 1 minor bust stock market investing cycle.

2001 – Sept 11 Twin Towers terrorist attack in New York. This lead to the near collapse of the US stock market due to panic selling from the attacks. Unfortunately, our market followed them down!

2003 – US invasion of Iraq. It cause the Middle East area to heat up and lead to high oil prices. Our stock market dropped sharply.

2008 – US Subprime Financial Crisis leaving many US banks and brokerages bankrupt. Our stock market followed the US down in a major correction!

What will Happen in the Next 10 Years?

Ever since the last major bust in the 2008 US sub-prime crisis, the market have been on the boom cycle. So now is 2015! ... and we had 6 years of stock market boom cycle without a major crash.

If you believe the 10 year boom bust stock market cycle theory, you know the boom cycle will end some day. So don't be surprised one day within this 10 calendar year, the stock market will experience a major crash as part of the investing cycle. Be prepared!