Brenton Point Research Process and Economic Cycle Overview
Economic Cycles / Asset Allocation Implications
Economic cycles are one of the foundational concepts of our asset allocation model. Under our model, an economic cycle is comprised of four stages – “Goldilocks,” “Fire/Boom,” “Stagflation,” and “Ice/Recession” – which reflect the interplay between rising and falling economic growth and rising and falling inflation. Based on our research, we believe that asset returns vary dramatically depending on the phase of the economic cycle. We believe that, although economic cycles and stages do not follow rules or rotate according to a schedule, there are points in each cycle that share similar characteristics to previous cycles. However, it can be challenging to identify stage transitions as they occur, especially because the duration of a stage can vary and moves between stages can reverse before moving forward again.
The diagram shows an approximation of our model, reflecting economic growth on the vertical axis and inflation on the horizontal axis, and summarizes our potential implications regarding general asset returns for each stage (although we note that returns can vary, not all assets within a category may behave similarly, and that past returns are not necessarily indicative of future results).
This overview is for informational, illustration and discussion purposes only and is not intended to be, nor should it be construed as, financial, legal, tax or investment advice, of Brenton Point Wealth Advisors LLC or any of its affiliates (“Brenton Point”). This overview describes certain research and analyses that may be performed by Brenton Point, but not all of the items described will necessarily be researched or analyzed at all times.
This overview is licensed for non-commercial use only, and may not be reproduced, distributed, forwarded, posted, published, transmitted, uploaded or otherwise made available to others for commercial purposes, including to individuals within an institutional use, without written authorization from Brenton Point.
©Brenton Point Wealth Advisors LLC 2017
Director of Market Research
Michael Schaus is the Director of Market Research for Brenton Point Wealth Advisors and Zweig-DiMenna. Since joining Zweig-DiMenna in 1992, his focus has been on macroeconomic research, the analysis of…READ MORE