Profiting From the Business Cycle
Why is there a business cycle? Someone once noted that people could tolerate any
condition except the possibility of one.
This one condition is prolong periods of
prosperity.
Incredible as it seems, this observation...
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Profiting From the Business Cycle
Why is there a business cycle? Someone once noted that people could tolerate any
condition except the possibility of one.
This one condition is prolong periods of
prosperity.
Incredible as it seems, this observation contains more than just a
kernel of truth, and helps to explain where we are in our current business cycle.
When the economy starts to recover from a stiff downturn, people are
understandably doubtful about the tenacity of the young expansion.
They hold
back on their discretionary spending and their use of debt.
As the upswing
continues to gather force, people tend to become less risk averse.
You might say
that the greed factor becomes more prevalent.
As the upturn ages, people become more confident and think that the expansion will last
indefinitely.
(This has a similar ring to peoples’ recent attitudes towards real estate)
Business people take on more debt to leverage their profit margins.
The consumer
will also be increasing the
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