Cyclical Risk Patterns & Equity Prices
Nearly a year after the end of the Great Recession, we concluded that we were "approaching the most dangerous period of the business cycle to employ a buy-on-dips strategy." That turned out to be a prescient forecast that was followed by widespread stock market worries about a "double-dip recession."
This conclusion drew on an analysis covering six decades that pinpointed the stages of the business cycle at which equities run the greatest risk of corrections. Given the current market rally, we repeat the analysis to assess the risk of market corrections, and their likely magnitude at this stage of the business cycle.
This conclusion drew on an analysis covering six decades that pinpointed the stages of the business cycle at which equities run the greatest risk of corrections. Given the current market rally, we repeat the analysis to assess the risk of market corrections, and their likely magnitude at this stage of the business cycle.