Measuring economic and equity market cycles

Where are we in the business cycle?

History doesn’t repeat itself, but it does rhyme. (Mark Twain)

 

An understanding of how asset classes and investment styles perform over different stages in the economic cycle can help limit the damage to a portfolio wrought by a severe downturn. Specifically, judging when a slowdown becomes a contraction and when contraction mutates into recovery will help investors choose the appropriate allocation among asset classes such as bonds, equities or commodities.

 

OECD Comp. Leading Indicators

Prognoseleistung von Frühindikatoren.pdf
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April 2009

 

What performs best during each phase of the business cycle?

 

Phases of the cycle_CONCEPTUAL FRAMEWORK
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Business_Cycle_Sector_Approach.pdf
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The-cycle-of-success-the-cyclical-nature
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Sector Rotation and Risk Appetite.pdf
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(DBIZ) PRING TURNER BUSINESS CYCLE ETF

John Templeton, said in February 1994, "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."

 

"A good forecaster is not smarter than everyone else, he merely has his ignorance better organised. Anonymous


Prediction involves maximising the ratio of signal to noise, with the signal being the predictable component and the noise been unpredictable events.

 

 

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