Investment Cycle clock

I thought that this graphic, by Merrill Lynch, was worth looking at in terms of where they see the economy in the cycle, and the type of investments they generally see as outperforming during any particular part of the cycle.

The other thing I thought I might try taking a stab at is how long each portion of the cycle typically lasts. Based only on my observation over time, I might suggest that the cycle has roughly 3,4,2,1 counts. My (un)educated guess is that the recovery portion usually is 3 helpings of time, the boom is 4 portions of time, the slowdown is 2 portions and the recession is 1 portion of time.

Using something like this clock may help you to time your type of investments a little better.

Hat tip to the Big Picture for this worthwhile graphic and also to his continuing coverage of the housing situation. Unlike many analysts, Barry Ritholtz has figured out where that particular train is headed (and it's not to the "Happy Days Are Here Again" station, just yet).



JW

The Confused Capitalist