The Flexible Investing Playbook: Asset Allocation Strategies for Long-Term Success

Chapter 9. Global Cycle Investing

MARKET CYCLES: A KEY TO UNDERSTANDING YOUR ODDS AS A LONG-TERM INVESTOR

I have devoted many years and hours to the study of stock market cycles. Understanding first that market and economic cycles exist, and also how they influence what investment approaches are successful at different points in time, is vital to nearly any investor. The benefit is that by simply knowing what is possible, you can gauge what level of portfolio risk you are willing to take on at different points in the cycle.

The study of market cycles could fill a library by itself. There is vital information for today's investor and financial advisor in the conclusions that have been made by those who devote time to studying such things. The scope of the issues of market cycles is far beyond the limits of this book. However, the conclusions are not. I suspect it is very likely that you are reading this book more because "you want to know what time it is" and not because "you want to know how the watch is made"—that is, you want to know what to do, not find out exactly how it's done and do it all over again by yourself. So, I will try to communicate a bit of the history of market cycle studies and focus more on the conclusions. After all, in my day-to-day work involving market cycles, I seek to identify secular trends and then determine how best to pursue them through investing. That is, in a nutshell, what the global cycle strategy is about.

The business cycle or economic cycle is ...