My Favorite Indicator for Bull Markets and Recessions

The Economic Trend Secret: How Savvy Investors Always Stay Ahead

Source: The Times of Israel

What I really like about this process of writing newsletters is that I see many investors have a detachment from their investments very similar to mine, with their only priority being to make money.

Often, we fall in love with assets and stocks, which shouldn't happen. We must remember that Apple or Microsoft don't care whether we own 2 or 2M of their shares. The Federal Reserve and governments also don't care if we're leveraged 200%.

All of them, if they think it's a good idea to take an action, will proceed, and believe me, they won't think of you. If you go bankrupt, the CEOs or the Federal Reserve Chairman won't care.

This is why I believe it's much more important to follow the economic trend (which determines which assets will rise and which won't) and set aside all kinds of biases.

When analyzing the economy, there are countless factors to consider. The data, making it very complicated to understand correlations and causations. However, I believe there are a few that can fairly accurately match the economic cycle.

One of them, which we've discussed here many times, is the liquidity cycle. However, there's another one I use to get a global picture of whether we're in a period of economic expansion or contraction. It's a period that has been accurate for more than 30 years, both on the rise and the fall.