Think of the economic cycle as a wheel… This image roughly captures the whole cycle, highlighting the various stages of economic growth and contraction. Right now, we’re just past “9 o’clock” on the wheel, as commodity prices have been steadily rising (although with some recent profit-taking). We’re surely done with the “8 o’clock” phase, where we saw stocks post a remarkable two-year rally after a sudden plunge. If the current cycle plays out as it has in the past, then more stock gains lie ahead, but perhaps in a more limited… Read More
Think of the economic cycle as a wheel… This image roughly captures the whole cycle, highlighting the various stages of economic growth and contraction. Right now, we’re just past “9 o’clock” on the wheel, as commodity prices have been steadily rising (although with some recent profit-taking). We’re surely done with the “8 o’clock” phase, where we saw stocks post a remarkable two-year rally after a sudden plunge. If the current cycle plays out as it has in the past, then more stock gains lie ahead, but perhaps in a more limited fashion than some realize. We may be looking at an extended period of economic expansion in coming years, but stocks prices always look ahead and have already anticipated some of that expansion. [For more on how sector rotation can lead you to the right stocks to profit, go here.] The economy has started to sputter back to life, as seen by rising employment figures and positive quarterly gross domestic product (GDP) reports. We’re just about at “9 o’clock,” or “general recovery.” When monthly employment trends really start to… Read More