Fidelity's Perspective Q4 2021-
The broad trend of "mid-cycle expansion" continued for many major economies, including the U.S. and Europe, with economic reopening generally supporting activity. However, supply constraints and disruptions sapped some growth momentum, and many developing countries remained inhibited by their more limited vaccination and reopening progress. China slipped into a growth recession amid significantly decelerating activity.
On Marks -
"One of those most important things is knowing where we stand in the cycle. I don’t believe in forecasts. We always say, “We never know where we’re going, but we sure as hell ought to know where we are.” I can’t tell you what’s going to happen tomorrow, but I should be able to assess the current environment, and that’s the kind of thinking that helped us prepare for the crisis. I think that the two most important things are where we stand in the cycle and the broad subject of risk, and in fact, where we stand in the cycle is the primary determinant of risk". - Howard Marks
Why this is an important consideration for the DG portfolio ? -
Mid-cycle phase
Averaging nearly four years, the mid-cycle phase tends to be significantly longer than any other phase of the business cycle. As the economy moves beyond its initial stage of recovery and growth rates moderate during the mid cycle, the leadership of "economically sensitive assets" has typically tapered. On an absolute basis, stock market performance has tended to be fairly strong, though not as robust as in the early cycle phase,while bonds and cash have continued to post lower returns than equities in the mid cycle. This phase is also when most stock market corrections have taken place.
From a DG portfolio perspective -
Taking into account present mid cycle and knowing the mid-cycle phase tends to be significantly longer than any other phase allows us to properly "position" the DG portfolio to not only increase investment share by building up share count in presently out of favor sector investments (Buy Low); But also helps us capture Business economic upside by "over-weighting" DG investments within those sectors that historically have shown a track record of out-performance during the Mid-cycle Phase.
A good read for those with Interest - The Business Cycle Approach to Equity sector Investing.
https://www.fidelity.com/webcontent/ap10...h_2020.pdf
I have been augmenting my DG portfolio utilizing this method and approach with good results for decades.
My portfolio has never seen the Highs of Bull market Highs, However it has also never experienced the lows of bear market lows either... Just slow and steady Growth at a reasonable level of Risk (for me).
If you can't pay it back, Pay it forward when you can.
- Scoot
fight your fights
find the grace
in all the things that you can't change
and help somebody if you can - Van Zant
The broad trend of "mid-cycle expansion" continued for many major economies, including the U.S. and Europe, with economic reopening generally supporting activity. However, supply constraints and disruptions sapped some growth momentum, and many developing countries remained inhibited by their more limited vaccination and reopening progress. China slipped into a growth recession amid significantly decelerating activity.
On Marks -
"One of those most important things is knowing where we stand in the cycle. I don’t believe in forecasts. We always say, “We never know where we’re going, but we sure as hell ought to know where we are.” I can’t tell you what’s going to happen tomorrow, but I should be able to assess the current environment, and that’s the kind of thinking that helped us prepare for the crisis. I think that the two most important things are where we stand in the cycle and the broad subject of risk, and in fact, where we stand in the cycle is the primary determinant of risk". - Howard Marks
Why this is an important consideration for the DG portfolio ? -
Mid-cycle phase
Averaging nearly four years, the mid-cycle phase tends to be significantly longer than any other phase of the business cycle. As the economy moves beyond its initial stage of recovery and growth rates moderate during the mid cycle, the leadership of "economically sensitive assets" has typically tapered. On an absolute basis, stock market performance has tended to be fairly strong, though not as robust as in the early cycle phase,while bonds and cash have continued to post lower returns than equities in the mid cycle. This phase is also when most stock market corrections have taken place.
From a DG portfolio perspective -
Taking into account present mid cycle and knowing the mid-cycle phase tends to be significantly longer than any other phase allows us to properly "position" the DG portfolio to not only increase investment share by building up share count in presently out of favor sector investments (Buy Low); But also helps us capture Business economic upside by "over-weighting" DG investments within those sectors that historically have shown a track record of out-performance during the Mid-cycle Phase.
A good read for those with Interest - The Business Cycle Approach to Equity sector Investing.
https://www.fidelity.com/webcontent/ap10...h_2020.pdf
I have been augmenting my DG portfolio utilizing this method and approach with good results for decades.
My portfolio has never seen the Highs of Bull market Highs, However it has also never experienced the lows of bear market lows either... Just slow and steady Growth at a reasonable level of Risk (for me).
If you can't pay it back, Pay it forward when you can.
- Scoot
fight your fights
find the grace
in all the things that you can't change
and help somebody if you can - Van Zant