Link De-valuation coming in waves?

I watch a niche every single day. I have been following a competitor’s ranking for close to 2 years now. We know Google is proactively devaluing links that they feel are solely there to manipulate the engines. From what I see if you purchase links the right way you are ok, I mean you have to be really dumb about your tactics if you keep the links purchases to only relevant sites.

I find it very interesting because this competitor partakes in methods which inevitably gives them hundreds of links across hundreds of different authoritative, relevant sites. Keep in mind this is a very old site that has hundreds of thousands of backlinks, they are about as authoritative as you can get. You practically have to murder something to get devalued like they are. The site used to dominate, it used to be #1 for tons of terms. Recently they came back into the picture, dominating like usual, then bam, de-valuation as I call it and they drop 6-7 spots on every single term they used to sit at #1 for. To me its very interesting to see them come back into the picture and then jump back down. I have noticed this happening since early this year and it has happened a couple of times now where it looked like they were back to dominate, only to get hammered several weeks later. Their optimizer is surely having a ulcer by now.