When we last wrote about Brookfield Property Partners (NASDAQ:BPY) the stock was hovering around $44 a share. That was on July 27th, 2019. Back then we though the price can reach $50, but instead of celebrating, the bulls should be getting ready to leave.
The reason for our skepticism wasn’t some special insight into the company’s operations that we had. Also, we had no idea what COVID-19 was back then. Instead, we focused on the Elliott Wave pattern in progress on BIP stock‘s weekly chart. Take a look below.
The pattern in question was, of course, a five-wave impulse. It had been unfolding since March 2009 and we labeled it 1-2-3-4-5. The last missing piece of the puzzle was a new high in wave 5. Wave 3 was slightly shorter than wave 1, so we thought wave 5 shouldn’t go much higher than $50.
How Not to Lose Half Your Money in Brookfield Partners
The theory states that a correction in the other direction follows every impulse. It made sense to expect a 40% drop to the support area of wave 4 near $32 or even lower. The ten months that followed were nothing short of a roller-coaster ride.
Brookfield Partners kept climbing until February 2020, when it reached an all-time high of $50.61. Then the coronavirus pandemic caused a panic like no other. The stock fell to $23.16 by March 23rd for a 54% decline in total.
As of this writing, those who had the luck and courage to buy at the bottom are on the verge of doubling their money. On the other hand, those who ignored the impulse pattern and bought near $50 are still under water. That is the difference Elliott Wave analysis can make in investing.
Now, it looks like the bullish 5-3 wave cycle is complete. It is true that the correction was much faster and sharper than expected. However, the same could be said about Cigna (NYSE:CI) in 2008. If this count is correct, new records are there for the taking in Brookfield Partners stock.