The Economic Cycle Research Institutes’ Lakshman Achuthan, shares his presentation notes and slides from the Bloomberg Sovereign Debt Conference last week in Frankfurt, Germany.
“The convergence of two cyclical patterns virtually dictates an era of more frequent recessions in developed economies. As a result, growth in developing economies is going to be jerked around more than people think, making for a good deal of cyclical economic contagion. In other words, we are now in the yo-yo years”.
The takeaways for investors as we work through the next 5 to 10 years are key:
- expect more frequent recessions (about every 3-4 years)
- decoupling is a mirage (in fact supplier to supplier export countries ie., China, Canada, Germany etc. are particularly vulnerable)
- “yo-yo years” for both developing and developed countries will continue
“So cyclical ups and downs in asset prices are hardly going away.
This warns against a complacent buy-and-hold mentality. In fact, the world is a much more dangerous place than many appreciate, but there are still going to be opportunities for investors, as long as they consider the timing of cyclical risk.”
Amen… Read the short but valuable report with helpful charts here.