The Shemitah. It's one of the more controversial and sexy topics amongst alternative investment communities and economists who are keeping their conspiracy theories on the downlow. Popularized by Rabbi Jonathan Cahn, the Shemitah's 7 year cycle has enormous implications for Wall Street, and to a lesser part, our individual investment and/or retirement portfolios. With the current Shemitah cycle about to end in September of 2015, if the Shemitah is a true economic barometer, it would be critical for everyone to understand its power. But how reliable of an indicator is the Shemitah? Using statistical and mathematical analysis, we uncover quantifiably the Mystery of the Shemitah. Script Famine. Calamity. Global economic collapse. It sounds like the trailer for a Hollywood blockbuster or the investment catalogue for a Mike Maloney hedge fund, but one of the biggest proponents for such dire prognostications is the Holy Bible. According to information provided by Chabad.org, as soon as the ancient Israelites settled into the Holy Land, they began to count and observe seven-year cycles that would culminate in a Sabbatical year, known as the Shemitah, which literally means "to release." The implications of the Shemitah are heavy and wrought with trepidation. Deuteronomy, chapter 15, verses 1 and 2 reads: At the end of seven years you will make a release. And this is the manner of the release: to release the hand of every creditor from what he lent his friend; he shall not exact from his friend or his brother, because the time of the release for the Lord has arrived. Arguably the biggest proponent of the Shemitah is Rabbi Jonathan Cahn, who has interpreted this Biblical passage to mean a period when the financial markets dramatically bleed, or to be precise, release, capital valuations. Mr. Cahn also points to extreme crises that seemingly proliferate during the Shemitah cycle: the 2008 global financial meltdown, the 2001 terrorist attacks, the 1994 attack on the World Trade Center, Black Monday of 1987. But how believable is this story? Rabbi Cahn has extensively warned Americans about the Shemitah through Pat Robertson's 700 Club, which has about as much credibility as a human-rights violations report on North Korea written by North Korea. As a statistical analyst, I approached the Shemitah with a healthy dose of skepticism but I nevertheless was intrigued so I ran the numbers. The Shemitah cycle by itself is not really interesting without a comparative baseline. Therefore, in addition to the Shemitah cycle, I took the average market performance of the S&P 500 going back to 1959 for every 7-year cycle outside of the Shemitah. For the first cycle in front of the Shemitah, the S&P returned on average 3.47%. In the second cycle, it returned a whopping 20.47%. In the third cycle, it returned nearly 6%, and generally speaking, each cycle ahead of the Shemitah produces increasingly positive returns. However, on the Shemitah cycle itself, it produces an average loss of negative-4%. This is completely aberrant from any other market cycle and certainly lends credence to Rabbi Cahn's assertions. But does it mean that the Shemitah cycle is real? Mathematically speaking, the evidence is not conclusive. Between 1959 to 1980, the Shemitah was essentially a 50/50 split. Only from 1987 to 2008 did the Shemitah trend in accordance to Biblical context. But with two divergent patterns, we can only guess as to what 2015 will bring. According to the quantifiable evidence at hand, the Shemitah is a faith-based barometer. Those that believe it will believe it, and those that don't, will not. Thanks for watching.

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