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The four seasons of investing

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- August 06, 2023

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Ray Dalio's How The Economic Machine Works

- January 21, 2019

Ray Dalio is the founder a Bridgewater Associates, the world's largest hedge fund management by assets under management. He is also a greater teacher. I recommend every student to watch his wonderful video of "How the Economic Machine Works". The model illustrates how the economy works based a simple, elegant and yet powerful model describing how K waves may actually be explained by the interaction of real productivity growth (GDP/capita) and the debt cycle. Productivity growth trends would echo the work of Schumpeter, who sought in the study of major technological innovations the root causes of each Kondratieff cycles, in what he famously dubbed a process of creative destruction. The use of credit as the main funding mechanism of the economic/capital growth cycle is then added to mix, thereby illustrating how long term debt cycles are punctuated by shorter ones and contribute to the accumulation and then misallocation of capital that ultimately co...

The Juglar's 9,2 year cycle

- January 21, 2019

Divide a generational cycle into two and you get what is often referred as a Juglar cycle, a 9.2 year or almost decade-long cycle, one that corresponds to the time that often separates recessions and major sun spot waves.

Kitchin and presidential cycles

- March 16, 2019

Divide a Juglar or an Armstrong cycle by two and you get what is known as Kitchin cycle, a 4 to 4.5 year cycle, also known as the “presidential cycle”, because it coincides with the electoral clock of the United States, the world’s leading economy and home of the world’s reserve currency. There is no doubt that the interactions between the fiscal and monetary cycles are major factors in monetary aggregates and as such do influence the US dollar and therefore pretty much every asset classes. That said, whether the political cycle is the cause or the result of a wider and more complex socio-economic machine remains a matter of debate. Politicians would be the first to take credit for any economic upswings and blame the downturn on the cycle itself. Like Kondratieff in his times, the purpose of this post is not to explain, but to expose a cycle that effectively corresponds to the bull-bear cycles of most equity markets and therefore, the average length of bull...