Ascendant Strategy was invited to write the cover story for this week’s edition of MoneyWeek (out on 6th June 2014). In this article we make some bold predictions for how the the cycle is going to unfold into 2026/27. This based on our unique research on economic cycles. In the article we:
- provide a forecast of how the main 18-20 year economic cycle will unfold in Western economies into 2026/27
- date the start of the nexr recession (the mid-cycle recession) and the one after that (the final major recession/financial crisis)
- explain why we are confident the cycle will repeat
- consider briefly the role of land and real estate speculation in driving the economic cycle forward
- set out key dates to watch for stock markets, commodities, bonds and real estate.
Most important of all, we emphasise again our analysis this cycle will involve the biggest boom of all time.
In the article we describe two of the tools that we have developed to assist investors with understanding where we are in the cycle and what is likely to happen next. First of all is the 18 year real estate clock:
(copyright Economic Indicator Services Ltd. 2005)
Since the cycle is ultimately driven by speculation in real estate (land) understanding what is happening the in property market is critical to our economic framework.
The second tool is the Economic Cycle Lead Indicator, set out in the diagram below, which provides advance warning of the peak of the cycle. The indicator exceeds and remains above a value of 1 when we reach the mature stages of the boom, which is the time to exercise caution (unlike everyone else); the indicator falls prior to the associated recession and stock market high. Its current value of 0.9, just above the lowest value of 0.85, is further confirmation that there is plenty of upside to go before this cycle is over.
(copyright Ascendant Strategy and Investments Ltd. 2014)
For further information on how we can help you make better investment decisions, please get in touch.
A copy of the full article can be obtained here.