Chapter 17
The Economic Cycle
Round it goes, where it stops nobody knows
‘An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.’
Laurence J. Peter
We are going to have a crash course in economics before turning our attention to Tactical Asset Allocation (TAA). In this chapter we will look at the basics of economics since economic conditions are the backdrop for the performance of asset classes.
The economic cycle
TAA aims to identify the current and next stages of the economic cycle to position the portfolio accordingly. The economic cycle (business cycle) is the economy’s natural fluctuation between growth and contraction of output, jobs, income and spending.
Trend rate of economic growth ...
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