The graphic below outlines the basic economic cycle.
Please read each of the individual captions / summaries as to familiarize yourself with the characteristics of each – then do what you can to put your finger on the portion of the graph that you think best describes our current environment.
The ask yourself where on the graph is makes the most sense to be “buying” and where on the graph it makes the most sense to be “selling”. Regardless of your asset class – this outline has been repeated over and over and over – providing an excellent “simple explanation” of the standard economic cycle.
I want you to fill out and submit comments on this – as to open discussion on this topic. This is the kind of “macro idea” one needs to put in their back pocket and carry with them at all times.
forex_kong_economic_cycle
Are we talking about the real state of economy or what “they” pretend it to be?
Do you want to be right, or do you want to make money?
I’ve suggested that “you” plot / find where “you” think we are – if of course “you” want to make money.
The idea here is to at least point out to those without a macro view – we most certainly ” are not” in an area where you’d suggest buying no?
The “boom mentality” as well “bond yields rise” looking about right?
The ponzi can only last so long.
Well, when is the mid-term/long-term debt due? That should give some kind of timeframe. Until then and as long as they keep printing 85 BILLIONS per MONTH, it’s high and above. There are roughly 2 billions of dollars yours for the taking every fucking day. Until that changes…
There is no use trying to predict the future. Just surf the damn wave, and enjoy the ride.
Words of wisdom – just surf the damn wave, and enjoy the ride.
Hey Kong,
Thanks for this thought experiment. A couple impressions…
— based on confidence mentality, stock prices and bond yields, we’re near the top of the upswing phase.
— commodities may be putting in a bottom… further strength (higher lows) would be good confirmation.
— on the other hand: policy has yet to become restrictive (and at this rate it may not for a long time), so there is a “little” disconnect here between markets and policy, right?… does $85B worth of policy extend the upswing indefinitely (or until another big crisis)? where does the downswing catalyst come from? feels like thin ice…
— As has been said already 1) these things can take a long time to resolve and 2) surf the damn wave and enjoy the ride.
Thanks again for the big picture reminder.
J
You bet Jworthy. Good call on our current location.
As well – I’m in full agreeance as these things ALWAYS take longer than you’d expect.
Awareness is all I’m after here….as anyone considering the “massive upside opportunities” being missed here at the highs…..should really just be thankful they’ve survived and have the means to deploy – WHEN the opportunity presents itself.
Patience – and the battle of fear and greed.
Nice post Kong. You have a tough job blogging time to peeps who do not do anything but today.
I will add something to the cycle idea. One must remember what generation we are dealing with. The boomers do not do things in a rational way. They are growing old and they are broke. They will do anything to go out on top. Boomers of course are world wide. A thought by a not crazy person just lived and learned a little.
Hey Kong. Do not show the second comment please. Having problems with word press. The name comes different every time. Thanks.
It can be argued that we hit that top of the cycle back in 2000 and that the subsequent years till present have seen two bear market rallies to new highs. The massive spin and manipulation used to pull off this amazing market levitation “trick” has now lost its mojo and ground level is beckoning down theeere…
Kong, please drop me an email or PM on FF.