A Cyclical Economy
This week we're talking about the business cycle, also known as the economic cycle. Much like a wave, the cycle ebbs and flows between periods of growth and contraction. However, the duration of each phase is typically asymmetrical.
Economic expansion and advancing stock markets have been the common state. That's not to say markets are up-only. On average, there have been recessions every 6.5 years since the 1950s.
Investing can be a series of two steps forward and one step back. We explore past economic cycles by looking at unemployment, stock market performance, and average returns after a market decline.
Investors who prepare for short-term uncertainty while keeping an eye on the horizon, we believe, are well-positioned to ride the cyclical economy waves.
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